What NMRC, HOMS and recapitalized PMBs mean to the economy
The Nigerian mortgage industry in the last couple of months has seen activities which analysts say are unprecedented in the annals of housing finance developments in the country, rekindling hope and confidence in an industry that was, before now, a lame-duck that inspired nothing but despair.
According to the analysts, it has been a season of mortgages which started barely two months ago on December 31, 2013, when the processes leading to the recapitalization of the primary mortgage banks (PMBs) were concluded with the hope of creating a strong and viable primary mortgage industry.
This was followed on January 16, 2014 by the launching of the Nigerian Mortgage Refinance Corporation (NMRC), setting the stage for the operations of a secondary mortgage market that, in the opinion of mortgage industry watchers, is the messiah that this industry had been waiting for.
On Monday, February 3, 2014, the Lagos State government flagged off its pace-setting Home Ownership Mortgage Scheme (HOMS) which is the only housing finance arrangement in the country today that has the semblance of a mortgage with its 10-year tenor and 9.5 percent interest rate.
With these three mortgage arrangements coming into the Nigerian property market, almost at the same time, it means the future is here for the economy of this country and its people majority of whom are without homes they can call their own.
The Federal Government has assured that NMRC would pull down lending rates for housing from the current spread of 20 to 23 percent to the low double digits or at least to a high single digit and, according to Ngozi Okonjo Iweala, the minister of finance, “this company is being set up to help lower the funding cost of mortgages and promote affordability and availability of good housing to working Nigerians by providing mortgage lending banks increased access to liquidity and longer term funds in the market”.
Apart from ‘crashing’ interest rate on mortgage loans, NMRC is also expected to deliver about 750,000 homes annually, which can only mean that home ownership level would increase with the multiplier effect of creating jobs and increasing national productivity.
Increase in productivity also translates to increase in Gross Domestic Product (GDP) which will ensure greater well being for the people and improved standard of living, all leading to economic growth.
Feelers from the Central Bank of Nigeria (CBN) which is overseeing the recapitalization of the PMBs shows that about 40 of the 83 PMBs that went for the recapitalization round have scaled the huddle meaning that more liquidity is coming into the financial system from that sub-sector of the economy.
Industry analysts describe the new capital regime and regulatory requirements for the PMBs as positive, hoping that this would help the banks meet wide expectations, especially considering the anticipated boom in Nigeria’s mortgage sector through the NMRC.
In the opinion of industry watchers, the LagosHOMS holds out much hope and promise, not only because of the sense of immediacy that it gives, but also in the way it is packaged with a relatively large housing stock and products on which mortgages are to be created.
The state did not just come out with a mortgage scheme for people to subscribe to and start looking for housing to buy through the scheme. It has built a good number of houses for the scheme and, according to Babatunde Fashola, the state governor, the state government has completed 1,104 housing units with 3,156 others at various stages of completion for the scheme.
By: Chuka Uroko