Real Estate

NMRC says market not ripe yet for single digit interest rate on mortgage

by CHUKA UROKO

March 24, 2015 | 12:31 am
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Mortgage loan seekers wishing to get single digit interest rate through the operations of the Nigerian Mortgage Refinance Company (NMRC) have to wait for some time when the mortgage market  grows and deepens enough to allow that to happen.

Authorities of NMRC have said that, though it is a private-public partnership between the government and the private sector, the company operates as a private sector-led institution, relying on the market to determine  interest rate on mortgage loans, meaning that the rate that applies to commercial loans may also apply to mortgage.

“The desire of NMRC, the Primary Mortgage Banks (PMBs) and the Central Bank of Nigeria (CBN) is to achieve single digit interest rate, but we are not there yet because the market does not allow single digit interest rate”, says Charles Inyangete, the CEO of NMRC, who spoke to BusinessDay on the sideline of a workshop for mortgage stakeholders in Lagos at the weekend.

“As it is today, we cannot meet the single digit interest rate until we are able to reach that point where the market allows it”, the CEO added,  raising concerns on the pronouncements by Ngozi Okonjo-Iweala, the Minister of Finance, at the launch of the company in January 2014.

“NMRC is expected to pull down lending rates for housing from the current spread of 20 to 23 percent to the low double digits or, at least, to a high single digit”, the minister said, adding, “this company is being set up to help lower the funding cost of mortgages and promote the affordability and availability of good housing for working Nigerians by providing mortgage lending banks increased access to liquidity and longer term funds in the market”.

Chii Akporji, Executive Director, Policy, Corporate Strategy and Partnership at NMRC, however explained to BusinessDay at the workshop that the minister’s pronouncements were mere projections that at certain stage of the operations of the company, that milestone could be archived in addition to the creation of jobs and 20,000 mortgages.

“Right now, we are working under market conditions and, over time, as the market deepens and grows, the issue of single digit interest rate would be expected. We are also very mindful of the challenges from the supply side; there is lack of sufficient housing in the market”, the executive director noted.

The CEO assured that whatever the rate was today, their desire was to drive it down to single digit, disclosing that they were doing as much as they could to achieve that and that they had several initiatives on-going  aimed to help them achieve that rate.

He noted that there was so much misunderstanding in the market about the company even among the practitioners themselves, hence the need for public awareness and sensitization of the market.

“We need a lot of clarity on this issue. For example, you heard during the discussion that people think that NMRC is single digit and this is even among the practitioner-group. But that is not the case. At no point was it said that the company was going to be single digit. From the onset, it was said that the rate would be-market driven. So, sensitization is very important”, he emphasized.

Admitting concerns out there in the public domain about the delay in effective take off of  the company, the CEO assured “we are closer than we were before; this company was set up to do refinancing, but we recognize that the market needs to be developed from the construction side. So, we taking a lot of interest in what is going on in the construction industry and this is because we need to ensure that we bring down house prices to affordable level”.

CHUKA UROKO


by CHUKA UROKO

March 24, 2015 | 12:31 am
12893  |   93   |   0  |   Start Conversation

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