Olatobi fajimi said "It is estimated that the country needs an average of 1 million housing units a year to replenish decaying housing stocks, and meet rising demand. With population presently over 185 million, it is impossible to provide affordable housing for middle and low income Nigeria who constitue the bulk of the population, without a viable long-term mortgage lending scheme"
Mortgage lending scheme as we know it today is predicated on short term loans in the face of rising inflation and high interest rate regime and as such is not sustainable.
| people living in dilapidated houses in Nigeria |
Nigeria can learn from the experience of the U.S, which established the Federal National Mortgage Association (Fannie Mae) in 1938, after the great depression ,to address the unwillingness or inability of banks and private mortgage institutions to extend loans to low income families. Through this initiative America has grown home-ownership to 67%.
In the same light, the Federal Mortgage Bank of Nigeria( and even State Governments ) should not be in the direct-leading business . Rather funds in their possession should be channeled through primary mortgage institutions just as the cardinal focus should be the develop a strong secondary market that could guarantee mortgage loans and support the loan-origination ability of primary institutions.
The emergence of pension funds with huge investable assets is a timely development. Also in this post-consolidation era. banks will be deluged with assets and hard-pressed to find sufficient viable investment product. Mortgage Backed Securities (MES) and Real Estate Investment Trusts (REITS)
are some of the lucrative options where long-term capital could be deployed, if well packaged, real estate investment is tangible, has a stable cash flow/income stream and offers a predictable capital affordable housing in Nigeria is a tremendous investment opportunity waiting to be tapped.
BY: owoyemi taiwo
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