Fresh hopes of home ownership are now on the horizon. They are coming on the heels of last year’s inauguration, of My Own Home scheme – a public-private partnership (PPP) created to increase access to housing finance and housing in the country.
The scheme, set up by the Federal Government, is under the Nigeria Housing Fund Programme (NHFP). It is being implemented by the Central Bank of Nigeria (CBN) and has the backing of the World Bank’s International Development Association loan.
The NHFP has broad-based stakeholders and partnerships, which include the Federal Government; Federal Ministry of Finance; CBN; World Bank; Federal Ministry of Power, Works and Housing; Federal Ministry of Justice and Mortgage Banking Association of Nigeria (MBAN), with mortgage originating institutions participating in the scheme. They are doing so via the equity they took in the Nigeria Mortgage Refinance Company (NMRC).
The NHFP entitles all Nigerians above the age of 21 years, and in paid employment, to access a low interest government-funded loan, according to the stakeholders.
To ensure that the scheme has the desired effect, principal stakeholders in the mortgage sub-sector, on whose shoulders the success of the NHFP rests, last week made known their intentions to adopt a strategy that would simplify mortgage transactions for aspiring homeowners.
Under the aegis of MBAN, the President of the body, Mr. Niyi Akinlusi, explained that the My Own Home scheme would help revamp the housing finance industry and make access to housing finance a lot easier through the NMRC, which would provide long-term refinancing of mortgages and standardised mortgage procedure.
To further enhance the scheme, Akinlusi said there is a Mortgage Guarantee Scheme – a window where borrowers with insufficient or no equity contribution can access mortgage for home ownership. Also available is the “Housing Microfinance Scheme”, which is an avenue to stimulate increased lending to low-income earners in the formal and informal sectors. This will be routed through microfinance banks for incremental housing construction.
“The scheme has set up a framework that will revamp the housing finance sector and make access to housing finance a lot easier. Unlike the conventional mortgage, the scheme allows beneficiaries to use the loan for the purchase of land and incremental building or renovation. People need to know that as long as they continue to pay rents as tenants, they are paying the landlord’s mortgage. They can use this same amount for mortgage and become house owners. When you remain a renter, you have helped the landlord to secure his own house, which will appreciate with time,” Akinlusi said.
In a similar vein, MBAN Executive Secretary, Mr. Kayode Omotosho, revealed that talks are ongoing with the National Pension Commission (Pencom) on how contributors can pull from their savings with the commission to use as equity contribution in the scheme. Very soon, he said, the guidelines for this will be out and pension contributors can use up to 25 per cent of their contributions of up to 60 months or five years as equity for mortgage loans.
“In addition to the NMRC, which tackles long-term funding, we also have the Mortgage Warehouse Funding Limited, which will take care of short-term funding. We call this initiative “native intelligence” to tackle our own challenges. In the past, we must have had issues but now, we need to talk to Nigerians on what to do to own their homes seamlessly,” Omotosho explained.
He is confident that the mortgage banks are in a pole position to actualise this project, especially after the recapitalisation exercise in the mortgage bank industry, which he noted, has prepared them for the new initiatives.
Equally, Omotosho said with the seamless integration of the customers of mortgage banks into the Bank Verification Number (BVN) platform and issuance of NUBAN numbers to facilitate online transactions, there has been improved operational efficiency for mortgage banks.
“There has also been inclusion of the informal sector with the distinct Uniform Mortgage Underwriting Standards; the amendment of the Pension Act to facilitate withdrawals from the Retirement Savings Accounts for down payments on equity contribution to boost inclusion and reduction in cost of title registration and transfer from 13 per cent of property value to three per cent in Lagos and Kaduna states,” he said.
Under the ‘My Own Home’ scheme, 34 primary mortgage banks, four commercial banks and nine microfinance banks had been selected to stimulate housing finance for low-income earners in the formal and informal sectors. Subscribers to the scheme will benefit from the $15m Housing Microfinance Fund and the $10m Technical Assistance Fund. LAPO Microfinance Bank is the pivot of the pilot scheme in the housing sector.