The Federal Government has approved a N250 billion mortgage refinancing loan to bridge housing deficits in the country.
The housing deficit in Nigeria is estimated to be over 22 million, with low-income earners mostly sidelined in the mortgage system.
Minister of Finance and Coordinating Minister for the Economy Wale Edun disclosed this on Thursday, shortly after the Federal Executive Council meeting presided over by President Bola Tinubu.
Edun explained that the Ministry of Finance is coordinating the process.
He said the fund is the basis for the revival and the return of long-term mortgage financing to the Nigerian economy.
His words: “The Ministry of Finance Real Estate Investment Fund is going to be, in the first instance, a N250 billion fund that will provide low-cost, long-term mortgages to Nigerians that want to acquire houses; it will help to complete or help to fill part of the gaping 22 million housing unit deficit.
“Of course, it will create jobs, it will stimulate economic growth, and it will also pave the way for other investors, the private sector, to come in and participate in the all-important housing construction industry with huge benefits and knock-on effects throughout the whole economy.”
Giving further insight into how the policy would work, he revealed that it is a long-term concept that will also attract long-term investors who would have the opportunity to earn market rates of interest on investment and market returns with market price-based rates of return on investment, which is going to be blended with seed funding of N150 billion.
“The target N250 billion of funding is for the provision of low-cost and long-term mortgages. When I say low cost, we are talking about low double-digit, maybe 11 per cent or 12 per cent, maybe even less, depending on market conditions.
“It will be achieved by attracting long-term savers, life insurance companies, maybe pension funds, within the limits of what is allowed, and other savers to save long-term. Their money will be blended with low-cost funding that the government has access to, funds that are available to the government at 1 per cent funds [and] available for 40 years,” he stated.
Edun also explained that blending the two—the seed funding by the government and the funds that investors bring under a prospectus—will create affordable pricing on the mortgages.
While briefing State House correspondents on the outcome of the FEC on Thursday, he stated: “As I’ve said, the tenor can be 20 years and more. What that does is, as I said, it opens up the whole mortgage sector and relieves Nigerians, who normally will be faced with almost 30 per cent interest rates, and 10 years or 2, 3, 4, years within which they have to pay back.
“Now they will have rates closer to 10 per cent and they will have tenures over 20 years, and that will be a tremendous relief. It is a promise kept by His Excellency, President Bola Ahmed Tinubu. As I’ve said earlier, the multiplier effects for the economy as a whole, to drive economic growth and job creation, are obvious to all. That was the second approval that was received by the Ministry of Finance today.”
Housing deficits: FEC okays N250bn mortgage refinancing loan for Nigerians
