Operators in the mortgage sector are targeting at least 10 per cent contribution to Nigeria’s Gross Domestic Product (GDP) as against 0.5 per cent. The Managing Director of Infinity Trust Mortgage Bank, Mr Sunday Olumorin, stated this yesterday in Abuja during a forum by the Finance Correspondents Association of Nigeria (FICAN).
Delivering a paper entitled: “Mortgage Financing in Nigeria: Impact on economy and financial inclusion”, Olumorin noted that achieving the feat would require the creation of more resilient housing finance systems; therefore, channelling long-term capital into housing remains has become a major priority of the mortgage sector.
Represented by Mrs. Ngozi Chukwu, the Group head, business development at the bank Olumorin stated: “Mobilising finance for housing delivery remains crucial to the development of the country and for sustainable recovery from the economic recession.”
He said there was an ongoing engagement with the Federal Government and the Central Bank of Nigeria on the critical need for Intervention/Matching Fund for the sub-sector to stimulate mortgage financing for home ownership.
A good starting point, she said, is to ensure increased access to mortgages by Nigerians, especially in the informal sector, which represents about 70 per cent of the economy, but is excluded from formal financial services, as well as the low and middle income earners, who need housing finance the most.
A well-functioning housing finance system Olumorin and Chukwu insisted “is imperative for a prosperous nation as it indeed plays an important role in stimulating economic growth and creating the much-needed jobs within an economy”.
Olumorin added that “the limited availability of land with clear Titles provides the impetus for investment in and development of innovations, while high cost of raw materials has the potential to foster the development of alternative building technologies.
“Any government that seeks to be close to its citizens should prioritize it. This is because the availability and non-availability of shelter affects the psyche of people and the economy of any country.
“The affordability of shelter provides psychological satisfaction, strengthens human dignity, respect, guarantees better health of citizens, generates employment and enhances productivity amongst others.
“Mortgage financing is the de-facto form of housing finance all over the world. It is generally enhanced by availability of long-term funds often linked to the capital markets to aid refinancing and securitization. Low interest rates, regardless of its nature i.e. variable, or fixed, also boosts mortgage financing”
“All these serve to ensure that loan tenure is elongated, usually spanning a minimum of 20 years. In addition, it is promoted by an enabling legislature that confers strong property rights and aids quick foreclosure/eviction among other necessary legal issues. Mortgage financing also thrives where the business environment and operating model aid short loan origination period.”
Also speaking at the event, the Director General of the National Pension Commission, Mrs. Aisha Dahiru-Umar said the Commission has recognized the relevance of mortgage financing which is why the Commission recently released a mortgage policy to assist Nigerians own their own homes.
The DG who was represented by the Head, Corporate Communications Department at PenCom, Mr. Abdulqadir Dahiru said “the Commission recently released a guideline for Retirement Savings Account (RSA) holders to access 25 per cent of their balance for mortgage as a way of complimenting efforts of the federal government in that regard”.