How far can NMRC go at resolving Nigeria’s housing deficit | Independent Newspapers Limited
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How far can NMRC go at resolving Nigeria’s housing deficit

Posted: Apr 17, 2015 at 12:31 pm   /   by   /   comments (0)

With the full operation of NMRC, a substantial building block will be put in place for mortgage finance institutions to meet Nigeria’s current housing deficit, in concert with the responsible behavior of other agencies/tiers of Government and the private sector.

Charles Inyangete, MD, NMRC

Charles Inyangete, MD, NMRC

The land registries, land courts, representing one such agencies of government, have to provide quick and easy access to certificates of occupancy and fair justice. Macro policy and fiscal discipline must be maintained to achieve acceptable inflation rates, and enable refinancing cost to fall to single digit. State governments need to provide an enabling environment by digitising land registries and simplifying the process of access to and transfer of land title.

This is achievable – but it is not guaranteed without the full buy-in of all key players. A Malaysian success story is ‘Cagamas’ which is currently supporting the entire Malaysian housing market.


Target beneficiaries

This initiative is for the benefit of all Nigerians in the long term. Beginning from the first phase of operations, average Nigerians with sustainable and verifiable level of income can access mortgage loans easier and faster from participating mortgage lenders. These institutions will be better equipped to provide long term loans having refinanced from NMRC. It will enable developers to build homes faster and allow these homes to be purchased at an affordable cost, and hence save more household disposable income for other investments.

NMRC is a wholesale financial institution which refinances portfolios of mortgage & commercial banks rather than originating individual mortgages and will cater for financial institutions rather than individual borrowers. The introduction of NMRC will help bring down the cost of mortgage loan by improving market efficiency, lowering cost of funds and allowing for longer repayment tenor period by financial institutions. NMRC as an intervention medium will encourage access to mortgage loans from financial institutions at currently approximately 2.5 percent above where the Federal Government borrows.

Lower income households will benefit from direct jobs created by the construction of new housing units and services required to build a home and deliver it to the final customer.

We expect to see an estimated 490,000 additional sustainable jobs over the next coming years. The wages earned by workers and profits earned by businesses during the construction period are spent on other local goods and services. This generates additional income for local people, which is spent on still more local goods and services, and so on. This continuing recycling of income back into the community is a multiplier effect of the successful implementation of the Project.


States already involved

Fourteen states of the country have expressed support towards implementation of the housing finance programme. The pilot states are Abia, Anambra, Bauchi, Bayelsa, Delta, Edo, Enugu, Ekiti, Gombe, Kaduna, Kano, Kwara, Ogun, Ondo and FCT – Abuja.

By creating an enabling environment for mortgage finance, State Governments will be able to attract NMRC to refinance mortgage loans created in these states. This will in turn improve the economy of these states by increasing employment/labour and housing production by stimulating housing construction and manufacturing of building materials in such states. More importantly, such States should experience a significant increase in Internally Generated Revenues (IGRs) through withholding tax earned from increased transactional activities, personal income tax earned from increased residency in such states, and fee income earned from increased volumes of mortgage transactions at the lands registries due to efficiencies created by digitisation and reduced mortgage transaction costs.

However, the opportunity presented by the housing market can be exploited if all Government agencies (State and Federal) and Private Sector (Financial Institutions and Construction Companies, etc.) act responsibly. What this means, for example, is that: all households wishing to either, develop their existing home, or acquire a home of their own, must know that they have easy and fair access to a certificate of occupancy without any doubt, this must be as natural as the right to a passport. Land registries in the States must provide access to these rights at a low cost and within a few months rather than within a few years, as is often the case.

Mortgage Institutions have to provide transparent product offerings, with standardized documentation, so that consumers can make self-assessments and develop realistic savings plans towards financing their homes.

Construction companies, artisans, suppliers of building materials, have to start building homes of real value and not of speculative value. This means that the quality and cost of homes should be easy to assess without large costs to the borrower. In the rare cases of default, the financial and mortgage institutions must be able to repossess, fairly and quickly. For this to be possible, the legal justice system for mortgages must be developed to work professionally.

The company said its Member Mortgage Lending Banks include Sterling Bank Plc; Access  Bank Plc; Heritage Bank Plc; Stanbic IBTC Bank Plc; Infinity Trust Mortgage Bank Plc; Homebase Mortgage Limited; FHA Homes Savings & Loans Limited; Aso Savings & Loans Plc; Trust Bond Mortgage Bank; Imperial Homes Mortgage Bank; and Abbey Mortgage Bank Plc.

Others include Resort Savings & Loans Limited; Platinum Mortgage Bank Limited; Jubilee Life Savings & Loans Limited; Haggai Savings & Loans Limited; Refuge Home Savings & Loans Limited; New Prudential Building Society; Sun Trust Savings & Loans Limited; Nigeria Police Mortgage Bank Limited; and Mayfresh Savings & Loans Limited.

Analysts believe that a new chapter in the annals of the country’s mortgage sector was created when the Nigerian Mortgage Refinancing Company (NMRC) was unveiled.

They explained that a mortgage liquidity facility, or mortgage refinance company, is a secondary market institution providing long term funds to mortgage lenders. A mortgage liquidity facility could provide an interim step for Nigeria between having a fully functioning secondary market and the need to extend the maturity of the liabilities base from deposit funding.



A report released by the Ministry of Finance said that the new mortgage company would enhance the provision of more houses at affordable prices nationwide. It said that NMRC would help reinvigorate the housing and construction sector.

“NMRC will help increase liquidity in the housing sector, provide secondary market for mortgages and thereby increase the number of people able to purchase or build homes at an affordable price in the country,” it said.

The report said 14 pilot states were earmarked for the programme, adding that governors of the states had agreed to provide and fast-track land titles, foreclosure arrangements and service plots.

The company is also expected to help create more than 200, 000 mortgages in the next five years at an affordable interest rates.

“To provide for those at the lower end of the economic ladder, there will be an expansion of mass housing schemes through a restructured Federal Mortgage Bank and other institutions to provide rent-to-own and lease-to-own options,” it said.

The ministry said that the idea would help many Nigerian families to own a home.

It explained that the idea would create additional jobs for architects and masons, electricians, plumbers, painters, interior decorators, among others.