In a bid to instil confidence and create awareness on its mortgage products, mortgage operatives have launched a leeway to woo prospective borrowers, which if successful will ensure a sustainable housing finance in the country.
The programme - Housing Finance and Investment Conference & Exhibition (HOFEX) 2011 was staged in Lagos under the auspicies of the the Mortgage Banking Association of Nigeria (MBAN), under the theme: National Housing Fund Scheme: A Sustainable Mortgage Financing Vehicle for Affordable Housing in Nigeria.
The Minister Lands, Housing & Urban Development, Ms. Ama Pepple who set the tone of discussion at the event said that the ministry was ever ready and willing to support any initiative that will enhance access to housing finance and mortgage for home ownership.
She added: “The ministry would in December host a team from Shelter Afrique, where discussions on how to benefit from a finance package in which Nigeria was a category ‘A’ signatory. We will continue to work with organisations to promote activities that will provide easy access to long term affordable and adequate housing.”
Managing Director/Chief Executive of Federal Mortgage Bank of Nigeria (FMBN), Mr. Gimba Ya’u Kumo, said that the challenges facing the Nigerian housing sector were daunting, particularly in achieving the over N56 trillion needed to bridge the existing 16 million housing unit deficit and a respectable homeownership rate.
He revealed that an initiative for cooperative housing for the informal sector was soon to be launched by the Minister of Lands, Housing & Urban Development, in December and that the NHF scheme might not be the only means to overcome housing challenges, but had proven relevant and instrumental to the development of the housing sector in country.
According to him cooperative societies could provide an additional layer of security for the affordable mortgage loans they would access to satisfy the housing needs.
MBAN President, Mr. Abimbola Olayinka also disclosed that arrangments were in the pipeline to establish mortgage re-financing vehicles for the sector adding that that the CBN would be able to participate through tier-2 capital of the refinancing sheme.
Olayinka urged removal of the Land Use Act for ease of amendment and that government should look at provision of minimum Initial Seed Capital of N500 billion as intervention funds through the CBN for mortgage, banking finance sector at a nominal interest rate of 1-2 percent per anum to jumpstart government Guaranteed Bonds for mortgages in the country.
Highlighting challenges to housing delivery, National President/Chairman of Council Registered Estate Developers Association of Nigeria (REDAN), Mr. Olabode Afolayan, said that access to land, non availability of long term construction funds, weak mortgage sub sector Primary Mortgage Institutions (PMI), low capacity mortgage liquidity facility, lack of professionalism of REDAN, hostile legislation and approval of hostile approaches by development control organs were major obstacles.
Giving a framework for implementation of mortgage liquidity using the Tanzanian case study, Chief Executive Officer, Tanzania Mortgage Refinance Company, Mr. Rished Bade, at the event advised government to establish mortgage information databank, form mortgage insurance products, offer fixed rate mortgage products in banks, and implement full securitisation of secondary mortgage market.
He said: “To resolve those issues and encourage home ownership, the Government of Tanzania established a Housing Finance Project (HFP) with the support of the World Bank to spearhead the reintroduction of mortgages in Tanzania. The project among other things enables the recreation of mortgages in the country by amending land laws, introducing Mortgage Finance Act 2008 and supporting creation of Mortgage Liquidity Facility.
“Tanzania Mortgage Refinance Company (TMRC) is a result of the Housing Finance Project. The establishment of TMRC is set to bridge the funding mismatch which is apparent if banks were to offer mortgages.”
Advancing a different insight to expanding the frontiers of the Mortgage Banking in Nigeria, Managing Director/Chief Executive Officer, Aso Savings And Loans Plc, Mr. Hassan Musa Usman elucidated that the informal labour market constituted a huge potential for mortgage lending as people in the informal sector were mostly in occupations such as retail trade, transport, restaurant, repair services, household or other personal services.
“We can harness this market by using independent credit enhancers like community associations, cooperatives and specialist packagers who understand the informal labour market, financial linkages such as the Micro-finance Banks, new technology platforms to reach the unbanked, that is, mobile payment technology, shelter related NGO’s to build up credit history and proper identification means for proper documentation.
“Government continues to play an important role in expanding the frontiers of mortgage banking in Nigeria by creating the enabling environment for cheaper cost of land. Reducing stamp duties especially for first time buyers. Setting up policies or laws that will take care of the Land Use Act and foreclosure laws in Nigeria. Also join the private sector in large-scale developments through public private partnerships.
Looking at securitisation and its effect in the real estate sector, Mrs. Olayemi Anyanechi, stated that securitisation had the capacity of providing the much needed long-term finance with low cost for the real estate sector in Nigeria.
Benefits of real estate securitisation according to her included improvement in return on capital, raised finance improves return on assets, diversity in sources of funding, reduced credit exposure to particular assets, matched-fund classes of asset, and regulatory advantage.
“For originators: higher leverage, that is, higher loan to value ratios (LTV) than would normally be achievable using more traditional financing methods, may lower the cost of debt for the borrower compared to traditional sources of financing.”