Key Points
- Nigeria needs about N60 trillion to address its housing deficit, according to MREIF.
- Annual housing delivery would need to rise from about 100,000 units to 700,000 units.
- FirstBank-MREIF mortgage scheme offers eligible applicants loans of up to N100 million at 9.75 per cent interest.
Main Story
Nigeria needs about N60 trillion in investment to substantially close its housing deficit, the National Coordinator of the MOFI Real Estate Investment Fund (MREIF), Mr Sani Yakubu, has said.
Yakubu disclosed this on Wednesday during a FirstBank of Nigeria Ltd. webinar themed, “Beyond Rent: The Path to Home Ownership Leveraging FirstBank-MREIF Home Loan Scheme to Build Long-Term Wealth.”
He said the country’s housing shortfall had exceeded 20 million homes, while the current rate of construction was only about 100,000 housing units annually.
To make meaningful progress in reducing the deficit, Yakubu said annual housing delivery needed to increase to approximately 700,000 units.
He explained that MREIF was created through a public-private partnership to improve both the affordability and availability of housing.
According to him, the fund’s initial N250 billion tranche consists of N150 billion from the Federal Government and N100 billion from private investors, as part of a larger N1 trillion programme registered with the Securities and Exchange Commission.
Yakubu said the fund’s partnership with FirstBank was intended to expand access to mortgage finance for Nigerians seeking to acquire residential properties.
He said the intervention was designed to increase financing in the housing market while complementing, rather than replacing, existing mortgage providers.
The Issues
The scale of Nigeria’s housing deficit highlights the gap between the country’s demand for homes and the pace at which new housing units are being delivered.
While increasing construction is necessary, access to long-term and affordable financing remains another barrier to home ownership.
Mr Olubiyi Adekunbi, Head of Real Estate Investment at ARM Investment Managers, said MREIF had disbursed more than N140 billion to over 2,000 beneficiaries since mortgage payments began in April.
He said the beneficiaries were spread across 27 states.
Under the scheme, eligible applicants can access mortgages of up to N100 million at an interest rate of 9.75 per cent, with repayment periods of up to 20 years, subject to their retirement age.
Applicants are required to provide at least 10 per cent equity, while eligible pension contributors may supplement this with up to 25 per cent of their Retirement Savings Account balance.
What’s Being Said
“Annual housing delivery needs to increase to about 700,000 units to significantly address the deficit.” — Sani Yakubu, National Coordinator, MREIF
“MREIF was established through a public-private partnership to address challenges of housing affordability and supply.” — Sani Yakubu, National Coordinator, MREIF
“The mortgage scheme will help democratise access to affordable home ownership across Nigeria.” — Chukwuka Okonkwo, Head, Personal Banking, FirstBank
What’s Next
Prospective applicants can approach FirstBank to begin the mortgage application process and receive guidance on the eligibility requirements.
FirstBank said it would finance completed residential properties with verifiable titles and was also working with developers and state housing corporations to expand the supply of affordable homes.
Mr Olufemi Adebayo, Executive Director, Sales and Investments, Leadway Pensure PFA Ltd., said eligible pension contributors could use up to 25 per cent of their RSA balance towards home ownership.
He said applicants under that arrangement must have contributed for at least five years, remain in active employment and have a minimum of three years before retirement.
Adebayo added that Leadway Pensure had processed more than 70,000 applications and disbursed over N70 billion under the scheme.
Bottom Line
Nigeria’s housing challenge requires both a major increase in housing construction and greater access to long-term financing. The FirstBank-MREIF scheme is one attempt to address the financing side by offering eligible Nigerians mortgages at below-market rates, while the broader housing deficit still requires a substantial increase in annual housing delivery.
