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Potential house owners missing out on N500bn mortgage loans
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People who cannot access mortgage loans living in tents
Nigeria's potential house owners are certainly missing out on an estimated N500 billion in unclaimed stock of approved mortgage loans believed to be locked up in the various vaults of both commercial and mortgage banks in the country.
The unclaimed value-potential within the banking system money watch sector experts have insisted, has resulted from the failure of government’s housing policy, which has made it difficult for developers to provide houses upon which these loans can be secured.
"Even individuals who ordinarily should be able to walk into their banks to access this money are faced by the bureaucratic difficulties associated with obtaining the almost-like Certificate of Occupancy (C-of-O), without which the loans cannot be released", said the BGL Financial Monitor for the first quarter of 2008.
The N500 billion projection is partly based on the fact that, with 24 fairly-funded banks operating in the country, each is estimated to hold as much as N12 billion of mortgage capital in its portfolio.
In addition, there are about 200 Primary Mortgage Institutions (PMIs), and each is estimated to generate N100 million available for onward lending to prospective house owners, said the report.
The reason these monies can be termed unclaimed mortgage loans is that applicants simply do not have suitable housing-investments to channel them to, thus bringing to light, the dearth of stock.
"Accordingly, the greater problem with mortgage growth is not necessarily the level of investment in housing development: without the houses, there will be no mortgage created,” the report noted.
Experts further say, rather than give loans to mortgagors who eventually find no stock at hand, banks should partner with developers by providing financing and also supporting the off-takers (mortgagors) to acquire properties.
The model is such that mortgagors need not have access to the funds, rather the funds would have been used by developers to build the houses while mortgagors get their desired houses.
In spite of this potential, the colossal housing deficit in the country has been said to require the entire federal budget compounded over 15 years to bridge.
Experts estimate that at between 12 and 14 million housing units, applying an upper-limit unit price of N5 million would cost this deficit at between N20 trillion and n30 trillion. Thus, to meet the housing needs of Nigerians, the real sector has to witness huge levels of investment in the next few years.
The reports points out that, "the basic needs of the market are affordable modern houses; hence the requirements of the market are low-income and mid-tier houses and not premium houses.”
Although real estate and mortgage experts have often maintained that the yearnings of the middle class, essentially include development of well constructed modern estates in choice locations around the country. In addition to property development, consumers also require the provision of mortgage financing for the acquisition of these houses.
Nigerian banks interestingly have afterall followed well-worn tradition and financed the budding market for mortgage lending through share capital and deposits generated from the public, and this has limited the amount of lending that is feasible, as financial institutions in developed markets have found out.
For instance, the entire share capital and deposits of all Nigerian banks as at December 31, 2007, are estimated at N1.57 trillion and N6.47 trillion respectively.
These amounts, according to the report, would finance, at the most, barely of a quarter of the national housing requirement, and serve Lagos alone.
Since banks finance mortgage lending through parts of long-termed deposits and share capital, are limited, this limitation portends a challenge for the demand for more housing units; in spite of increasing supply.
"Even individuals who ordinarily should be able to walk into their banks to access this money are faced by the bureaucratic difficulties associated with obtaining the almost-like Certificate of Occupancy (C-of-O), without which the loans cannot be released", said the BGL Financial Monitor for the first quarter of 2008.
The N500 billion projection is partly based on the fact that, with 24 fairly-funded banks operating in the country, each is estimated to hold as much as N12 billion of mortgage capital in its portfolio.
In addition, there are about 200 Primary Mortgage Institutions (PMIs), and each is estimated to generate N100 million available for onward lending to prospective house owners, said the report.
The reason these monies can be termed unclaimed mortgage loans is that applicants simply do not have suitable housing-investments to channel them to, thus bringing to light, the dearth of stock.
"Accordingly, the greater problem with mortgage growth is not necessarily the level of investment in housing development: without the houses, there will be no mortgage created,” the report noted.
Experts further say, rather than give loans to mortgagors who eventually find no stock at hand, banks should partner with developers by providing financing and also supporting the off-takers (mortgagors) to acquire properties.
The model is such that mortgagors need not have access to the funds, rather the funds would have been used by developers to build the houses while mortgagors get their desired houses.
In spite of this potential, the colossal housing deficit in the country has been said to require the entire federal budget compounded over 15 years to bridge.
Experts estimate that at between 12 and 14 million housing units, applying an upper-limit unit price of N5 million would cost this deficit at between N20 trillion and n30 trillion. Thus, to meet the housing needs of Nigerians, the real sector has to witness huge levels of investment in the next few years.
The reports points out that, "the basic needs of the market are affordable modern houses; hence the requirements of the market are low-income and mid-tier houses and not premium houses.”
Although real estate and mortgage experts have often maintained that the yearnings of the middle class, essentially include development of well constructed modern estates in choice locations around the country. In addition to property development, consumers also require the provision of mortgage financing for the acquisition of these houses.
Nigerian banks interestingly have afterall followed well-worn tradition and financed the budding market for mortgage lending through share capital and deposits generated from the public, and this has limited the amount of lending that is feasible, as financial institutions in developed markets have found out.
For instance, the entire share capital and deposits of all Nigerian banks as at December 31, 2007, are estimated at N1.57 trillion and N6.47 trillion respectively.
These amounts, according to the report, would finance, at the most, barely of a quarter of the national housing requirement, and serve Lagos alone.
Since banks finance mortgage lending through parts of long-termed deposits and share capital, are limited, this limitation portends a challenge for the demand for more housing units; in spite of increasing supply.
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