An insight on Nigeria Mortgage Refinance Company and Lagos Home Ownership Scheme

If the current tempo continues, 2014 may eventually go down as the year of the mortgage revolution in Nigeria. In January, the Federal Government launched the Nigeria Mortgage Refinance Company (NMRC) while the Lagos State Government last week, kicked started the Lagos State Home Ownership Scheme (Lagos HOMS). Both Mortgage programs have been set up to reduce the stress of home ownership for low income and middle class citizens.

The NMRC was launched on January 16^, 2014 in Abuja by President Goodluck Jonathan as a Public Private Partnership (PPP) arrangement with shareholders spanning government agencies, local and international financial institutions, mortgage banks and private equity investors. It is a secondary market institution providing long term funds to mortgage lenders. The Lagos state HOMS, on the other hand, was created by Governor Babatunde Raji Fashola-led administration after 3 years and 27 meetings of deliberate planning in conjunction with the state Ministry of housing, developers, financial houses and tax payers. It is a stimulus package for equity-supported access to home ownership that will provide the framework for sustainable mortgage schemes.

In their separate speeches both the President Jonathan and the Governor Fashola agreed on one thing; many ordinary working-class people cannot afford to acquire homes out-rightly. The idea behind mortgaging is to help people own a home with ease and enable them pay gradually with bearable toll on their income. It is necessary to point out that while the Lagos State HOMS project is a straight Mortgage transaction, the NMRC initiative is refinancing the banks enabling them to give people cheaper mortgage rates.

Though the ideologies behind the projects are the same, studies show a wide array of differences. Highlighted below are some key points from the study of both initiatives:

Nigeria Mortgage Refinance Company [NMRC]

• It is a Public Private Partnership.
• It is a facility created to ease Nigerian citizens access to mortgage financing and help lower the funding cost of mortgages and promote the availability and affordability of good housing to working Nigerians by providing mortgage lending banks with increase access to liquidity and longer term funds in the mortgage market.
• Only certified citizens of the country can apply.
• Zero percent interest loans to financial institutions that can be disbursed to people who want mortgages at single digit interest rates [between 6-8 percent].
• Beneficiaries can take liberties of between 15-20 years to pay off their mortgage.
• Reduction of land registration cost to users for as low as 2%.
• To official kick off in June 2014.

 

LAGOS STATE HOME OWNERSHIP MORTGAGE SCHEME [LAGOS HOMS]

• It is a state government initiative financed by tax payer funds [IGR].
• Only Lagos residents certified by the tax laws of the Federal Republic of Nigeria with prove of tax payment of at least 5 years are eligible to apply.
• Open to only people who have never owned a home. Proof of prior ownership of landed property during mortgage period is grounds for repossession.
• Beneficiaries can take liberties of at least 10 years to pay off their mortgage.
• Maximum interest rates of 9.5 percent.
• Houses cannot be rented out until after 10 years.
• Successful applicants must immediately pay a deposit of 30 percent of the house value.
• 200 houses to be allocated every month.
• First batch of 200 houses to be ready by 4^th of March 2014.
• Website already up and running to receive applications.

With all these in perspective, Nigerians can subscribe to mortgage plans that would best suit their life plans. In closing, Mortgaging seeks to improve and develop the housing market and ensure more Nigerians can own homes at affordable residential mortgages.

Written by Staff writer: Enemigin Oritseneye

 

 

2014-02-09