Where are the wealth-building products?
Manos entregando una casa
Time there was in Nigeria when activities in the country’s mortgage market were not only fascinating but also rewarding to those who were part of those activities. While the market remained a fledgling, activities in it, especially before the banking sector reform, were quite interesting. The foray of many commercial banks into retail mortgage after the banking consolidation and recapitalisation led to the evolution of a competitive business environment, and a culture of efficiency and innovation among the operators.
Institutions had to develop competitive spirit not only to remain in business, but also to increase and make good returns on shareholders’ investment. It was such that innovative ideas, especially in product origination, became the norm rather than the exception.
The market was awash with products, especially those that would enable consumers have easy access to homeownership. Some of the mortgage institutions took it a step higher with the creation of products that would enable property owners build wealth from their property and yet enjoy the comfort of such property.
But that was then. Today, the market is almost bereft of any. Consumers, therefore, look back to those days in the market and ask where those products from which they could build wealth and make a difference in their investment or assets have all gone to.
They have not forgotten such products as First City Monument Bank’s (FCMB) ‘Unlock your Cash’ and former Bank PHB’s ‘Home Owner’s Advantage’ because those are the kind of products that they need today in the face of the economic downturn in the economy.
FCMB’s Unlock your Cash, a variant of the bank’s flagship mortgage product, ‘MyHome’ was one of the most popular refinance products in the mortgage market. This gave opportunity to people who had worked hard to build or buy their homes to let those homes work for them by releasing the funds comparative to the value of the property towards meeting other life needs.
Some customers who had been forced in the past to borrow short tenured loans of 3 to 5 years had the opportunity, through this refinancing option, to access the product while the bank paid off the loan owed the financial institution and provided more manageable repayment amounts that eased the customer’s cash flow through the bank’s longer tenors.
For existing home owners, the bank allowed them to unlock up to 70 percent of the value of the property if they lived in it and 60 percent if they didn’t. It also provided home owners the opportunity of registering their titles, making their properties mobile and ensuring that they were working for them just like share certificates made stocks fluid.
Officials of the bank explained then that they had been able to impact positively on tenured loans in the market by providing longer tenure.
“We have been able to offer long tenured loans to the Nigerian mortgage market. Our observation before we entered the market was that only short term loans were available, making mortgages very unaffordable to the average salary earner. Now, with a longer pay back period, repayments are more manageable, with the option of reducing one’s principal outstanding when his economy improves or even leveraging more funds as the property price appreciates”, they said. This kind of statement is rare in the mortgage market of today.
The Home Owners Advantage floated by the defunct Bank PHB was another wealth building product that, by its name, gave advantage to homeowners to build wealth on such homes.
The product was different from traditional mortgage financing in the sense that it allowed those who owned their homes and had legal titles to them to raise finance out of their property for a fixed period. The finance they have raised could be used to buy new assets or create new investments, grow their wealth and have an even better life.
Over all, these are the kind of products that both home owners and those who want to own one are longing for. According to them, mortgage products should be able to meet the needs of its consumers. What obtains in the market presently are generally unaffordable and do not give any advantage to existing or prospective homeowners.
Mortgage operators, however, insist that they have ‘something for somebody’ in the market. Resort Savings and Loans’ RIMPLAN, an acronym for Resort Investment Plan, and Trustbond Mortgage Bank’s HomePlan stand out. According to the authorities of these banks, subscribers to the products have a lot of benefits to enjoy They explain that RIMPLAN is a well thought out product aimed to encourage savings towards homeownership and it facilitates timely and favourably priced mortgage delivery to the subscriber.
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