FG assures on 14.5% borrowing rate for loans under new Mortgage Refinance Scheme

Mortgage loans under the new mortgage refinance scheme would be accessed at 14.5 percent interest rate and is expected to ease over time, BusinessDay has been informed.
Ngozi Okonjo-Iweala, the coordinating minister for the economy and minister of finance, said she is also working to reduce extra charges on borrowings at state level from 16 percent to 3 percent.
These are in efforts to removing barriers to accessing mortgage in Nigeria, particularly access to finance which led together the setting up of the Nigeria Mortgage Refinance Company (NMRC), the finance minister said.
Meanwhile, many developers and builders are already raising concerns about inadequate and non-availability of medium to long term funds for construction finance as a major constraint to housing delivery.
“This is something we are looking into seriously,” she assured, announcing that the World Bank is currently working with the Real Estate Developers Association of Nigeria (REDAN) to develop a Guarantee Fund that will enable developers to access longer term funds for construction at reasonable rates.
The guarantee process, she said, can unblock the bottlenecks currently faced by developers, hence enabling them address the current deficit in housing supply in Nigeria.
The Federal Government, through the Federal Mortgage Bank, is also working in partnership with private developers to establish a flexible home finance mechanism like rent-to-own scheme which will enable Nigerians to ultimately own houses that they live in after a number of years of paying rents. “We hope to kick-off this scheme in the coming months.”
NMRC is essentially a refinancing mechanism which provides mortgage lenders with access to increased liquidity and long term finance, enabling them provide 20-year mortgages at affordable rates to borrowers.
So far, 18 states have signed up to the scheme, all assenting to review extant land titling, governor’s consent and property registration processes to facilitate greater home ownership.
Through a Memorandum of Understanding, Lagos State governor and the minister of the Federal Capital Territory for example, have signed up to review existing governor’s consent, titling and property registration processes.
This is in a view to reducing costs and fast-tracking the steps to perfection of mortgages at the lands registries to the benefit of their citizens in addition to enhancing revenue generation from volume sales of mortgages.
NMRC is also promoting legislative reform through a Model Mortgage and Foreclosure Law proposed for passage and adaptation by state governments to ensure the timely resolution of mortgage disputes and to create an efficient foreclosure process.
A Uniform Underwriting standard to govern mortgage origination and administration has also been developed in partnership with the mortgage lenders, information from the finance ministry indicate.
The establishment of the NMRC was supported through a World Bank/IDA credit of $250 million at zero interest, 40-year period and 10 years grace, and 0.7% commitment charge, to be disbursed in 6 tranches as Tier 2 capital.
NMRC has also so far raised N7.05 billion shareholders’ capital and will raise funds in the capital market through the periodic issuance of Federal Government of Nigeria guaranteed bonds to the tune of N50 billion to institutional investors, with the overall target of $5 billion in bond issuances in the medium term.