Housing finance: FSS2020 mortgage market growth strategy seeks 30% access

In line with its vision, the Financial Systems Strategy (FSS2020) says it aspires to see a mortgage market in Nigeria that would have, by 2020, provided access to housing finance to over 30 percent of Nigerians in all social classes in urban centres to own their own houses.

As Federal Government’s financial think-tank for Vision 2020 mega-economy dream, FSS2020 has the vision to have one of the safest, highest homeownership rates and most profitable mortgage markets among the emerging economies. Its mission is also to use mortgage market as a major agent of positive social and economic change by making mortgage finance available and affordable to all classes of Nigerians.

Consistent with this, FSS also aspires to have a mortgage market that has multiple long-term funding sources including full integration with the Nigerian capital market where the value of listed mortgage-backed securities will be at 20 percent of the market capitalisation of equities.

Oluwatoyin Jokosenumi, FSS2020 deputy director at the Central Bank of Nigeria (CBN), who disclosed this at the 3rd Housing Finance and Investment Exhibition (HOFEX) organised by the Mortgage Banking Association of Nigeria (MBAN) in Lagos, added that the strategy also foresees a market that would account for about 15 percent of the gross domestic product (GDP) of the country.

Jokosenumi, who spoke on the topic ‘Secondary Mortgage Market for Effective Financing of Affordable Housing in Nigeria: The Role of Federal Mortgage Bank of Nigeria (FMBN)’, also envisaged a mortgage market that would stimulate construction activities with attendant multipliers and provide jobs for up to 10 percent of the population.

He pointed out, however, that for the market to witness this change, there had to be some paradigm shift, explaining that access to housing finance should grow from present level of 0.5 percent to 30 percent over the next 10 years.

“Capital Market products for the finance of the mortgage sector, including mortgage-backed securities, should grow from the present zero percent to 20 percent over the next 10 years, while the contribution of mortgage finance to Nigeria’s GDP has to grow from 0.76 percent to 15 percent in the next 10 years,” he said.

On his part, Taba Peterside, general manager, listings sales & retention, Nigerian Stock Exchange (NSE), noted that despite the present challenges, the Nigerian mortgage market had huge opportunities and bright growth outlook.

Peterside, who spoke on ‘The New Capital Base as a Catalyst for Mortgage Banking Growth: The Role of the Nigerian Stock Exchange’, noted that, like other emerging economies, the increase in housing requirements in Nigeria was driven by economic expansion, growing population and urbanisation of major cities.

He said annual growth projections in the real estate sector were put at a conservative 15 percent-17 percent from 2010 to 2020, lamenting that currently the industry accounted for less than 2 percent of the country’s GDP

“PMBs could grow beyond the issues of inadequate funding, as well as harness the huge opportunities in the industry through listing,” he said, pointing out that growth outlook for the sector could be seen in the impending take-off of the Nigerian Mortgage and Refinancing Company (NMRC), N56 trillion financing requirement, and Nigeria’s population of over 160 million.