NMRC’s efforts at changing mortgage sector narrative

The Nigerian mortgage sector narrative has always been about slow growth, inaccessibility and unaffordability of mortgage products/loans, especially by those who really need it, and commercial interest rate on short-tenor loans.

When the Nigerian Mortgage Refinance Company was established four years ago, central to its mandate was to change this narrative so that the major barrier to owning homes in this part of the world would be removed by bringing more people into the mortgage net.

In the last four years, NMRC has been busy forming alliances, raising bonds, refinancing mortgages, signing partnership agreements, going into joint ventures with private sector operators and state governments. Though it is not yet a smooth sail for the company, it is not resting on its oars.

Riding on the relative success it has achieved since its establishment, the company is out on an aggressive drive towards the adoption of a model mortgage and foreclosure law by their pilot states.

As part of efforts at growing a mortgage system that will drive housing affordability, the company is presently driving a legislative reform in the mortgage sector by proposing a model mortgage and foreclosure law by key pilot states including Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Enugu, Kano and Ogun states.

What the company is driving at, according to one its directors whose primary mortgage bank is a major shareholder in the company, is to get various states houses of assembly to pass foreclosure laws as a prelude to mortgage-backed affordable housing delivery.

This is good news for home seekers who may need mortgage facility because foreclosure law, upon adoption, aims to fast tract the process for creating legal mortgages, ensuring timely resolution of disputes and creating an efficient foreclosure process.

According to the authorities of the mortgage refinancing company, the model mortgage and foreclosure law is in its final form for engagement with 21 pilot states committing to the implementation of an enabling environment for the development of the mortgage market.

The company is focusing on building capacity and completing outstanding operational activities. “We will be embarking on an aggressive drive towards the procurement of an ICT Infrastructure for the mortgage industry, the completion of our second tranche equity capital raise and, most importantly, the completion of our first round of mortgage refinancing; we will work hard to meet our mandate to revolutionize the Nigerian mortgage landscape”, its CEO, Charles Inyangete, assured.

In the past couple of years, the company has demonstrated uncommon resolve to live out its mandate with refinancing of some mortgage institutions including Imperial Mortgage Bank Limited—a primary mortgage bank— whose existing mortgages were refinanced to the tune of N1 billion.

Mortgage operators have described this refinancing as a milestone and, according to Ben Akaneme, Imperial Mortgage’s managing director, “this is an outstanding achievement in the march towards the realisation of affordable and single-digit interest rates for mortgages in Nigeria, and assured that the bank would continue to strive to achieve its mission of enabling easily accessible and affordable mortgages to Nigerians in order to ensure housing for all.

NMRC seems to be conscious of the demands and obligations inherent in the Nigerian business environment. “We will continue to anchor all our services on global best practices, good corporate governance and strict risk management practices”, Inyangete assured further.

By now, the company might have got from its shareholders the approval to, among other things, increase their capital base for three main reasons including capital adequacy, mortgage refinancing and procurement of necessary infrastructure.

As at the time when this request was made, the shareholders who saw the need for capital adequacy for the company, especially for its mortgage refinancing function, could not, however, come to terms with the management‘s explanation on the issue of infrastructure and therefore insisted that the capital raise be put on hold until the management was able to spell out those items of infrastructure that made the capital raise necessary.

NMRC came into the Nigerian mortgage market on a very high pedestal, promising a major shift in the interest rate regime in the market. But the authorities of the company have said that, though it is a partnership between the government and the private sector, the company operates as a private sector-led institution, relying on the market to determine interest rate on mortgage loans, meaning that the rate that applies to commercial loans also applies to its mortgage.

“The desire of NMRC, the Primary Mortgage Banks (PMBs) and the Central Bank of Nigeria (CBN) is to achieve single digit interest rate, but we are not there yet because the market does not allow single digit interest rate”, said its CEO, adding, “as it is today, we cannot meet the single digit interest rate until we are able to reach that point where the market allows it”.

Right now, the company is working under market conditions hoping that, over time, as the market deepens and grows, the issue of single digit interest rate will be expected. The CEO assured that whatever the rate is today, their desire is to drive it down to single digit.

Chuka Uroko