The newly established Ministry of Finance Incorporated (MOFI) Real Estate Fund (MREIF) has gone global as banks have taken home loan facilities offered by the fund to Nigerians in Diaspora, notably those in the US, UK and Canada.
MREIF is a home loan facility designed to tackle challenges in the housing sector by addressing both supply and demand constraints faced by developers and home buyers. It is for employees and self-employed Nigerians at home and those in Diaspora, with a maximum loan amount of N100 million at a 12 per cent interest rate over 20 years with 20 per cent equity contribution.
At the forefront of the banks offering this facility to Nigerians abroad is Stanbic IBTC Bank, a leading deposit bank in Nigeria, renowned for its friendly mortgage and other credit facilities. Other banks offering this facility are Homebase Mortgage Bank, Imperial Homes Mortgage Bank, and Infinity Trust Mortgage Bank.
Femi Johnson, Founder/former CEO, Homebase Mortgage Bank, who confirmed this to BusinessDay on Friday, noted that of these mortgage banks, which also include AG Homes, Homebase, and Imperia, they are the most active in this new drive.
Johnson stressed that Diaspora Nigerians are falling over one another to get in on this. “They are really pushing for it. The interest they are showing is unprecedented. For the first time, they can get mortgages back home at interest rates similar to what they are used to abroad, and also at the speed they are used to abroad.
Church groups, work groups, investment clubs, and various individuals have been calling to get in on this, mostly from the USA, UK and Canada,” he stated.
Johnson, who is also a former president of Mortgage Banking Association of Nigeria (MBAN), reasoned that interest is coming most from the US, UK and Canada because they are the three countries Homebase has concentrated its marketing efforts on for physical and Zoom presentations.
“We also do online ads and daily information sharing over all the six popular social media platforms, including Instagram, Facebook, X (formerly Twitter), LinkedIn, YouTube and TikTok, which are seen all over the world,” he disclosed.
On its part, Stanbic has been quite aggressive with marketing this facility. The bank, in a recent statement, announced a review of the fund’s offerings. As against the fund’s 12 per cent interest rate, the bank is offering a lower rate of 9.75 per cent per annum and a reduced equity contribution of 10 per cent, down from 20 per cent.
To give out this loan, Stanbic is looking for customers earning N500,000 as a minimum salary per month and the equivalent for Diasporans, while self-employed customers should have a minimum of N100 million annual turnover.
In a fact sheet shared by a vendor, Agent Jake, on his X handle, Stanbic says the loan amount could be as low as N10,000, whereas the maximum amount is N100,000, assuring, however, that it finances any excess above the maximum amount.
“All existing parameters to apply to include stop-gap facility option, where required, while awaiting the MREIF disbursement,” the fact sheet says, adding that while the currency for this transaction is the Naira, the minimum property value to be applied for is N12.5 million.
It adds that the equity contribution could come from 25 per cent of the loan applicant’s retirement savings account from his Pension Fund Administrator (PFA).
Read also: MREIF slashes down payment for home ownership to 10% and lowers interest rates for all Nigerians
“Life and Property Insurance cover is mandatory; the maximum loan tenor is 20 years for employees and seven years for the self-employed. For employees, the loan must mature when they are 60 years old or on their official retirement age,” the fact sheet says.
It reveals that the loan attracts facility fees, including a 1 per cent management fee and another 1 per cent advisory fee, adding that a joint application is allowed with a spouse only.
Jake described the Fund as a nice development, advising the diasporans to take advantage of the opportunity that the Fund offers. But this advice drew mixed reactions from the migrant community.
“That’s the best deal I’ve ever seen, interest rates are closely related to inflation rates, our inflation rate in Nigeria today is over 20 percent, an interest rate of 12 is a very sweet deal that everyone capable should rush,” Jake noted.
While some of the Diasporans welcomed the idea and expressed interest, others dismissed it as being too expensive, citing the 12 per cent interest rate and the 20-year tenor, which they noted are too high and too short, respectively.
Many of them took to their Twitter handles to express how they view the mortgage offer. According to @cosmos_lee, “this is a very good one to be honest, but if my maths is ‘mathing,’ say I borrow N50 million at 12 percent per annum, I would be paying back over N135million in interest for a 30-year period?”
In his own reaction, @compoundingnaira notes that 12 per cent for he loan additional 2 per cent for fees, gives 14 per cent total for the loan, pointing out that any serious diaspora in North America should be able to get a 6-8 per cent loan, and with Europe at a cheaper rate, he doesn’t see this being a hit with the diaspora.
Another Diasporan, @JayKezie, counters @compoundingnair, saying that no bank in North America will give an immigrant a mortgage to buy a property in Nigeria, adding that interest rates are relative to the inflation rate. North American banks can offer a ven 4 per cent interest rate because the inflation rate is sub-2 per cent, while Nigeria’s inflation rate is 33 per cent. So, a 12 per cent loan is cheap,” he said.
“Canada’s inflation rate is 1.9 percent, up from 1.7 percent previously. Bank of Canada interest rate is currently at 2.75 percent. A simple google search will help,” he added.
@Kadupee does not understand why everything Nigerian is different in a negative sense. He requests, “someone should please make me understand why borrowing is so expensive in Nigeria and most African countries. 12 percent on a 20 percent down payment, when you have USA at 6-7 percent. CBN needs to do better.”
