By Bashir Ibrahim Hassan
Affordable housing is the ultimate objective of mortgage refinancing programmes, but different circumstances may lead different countries to introduce it. The Barrack Obama administration authorized several refinancing programmes aimed at helping underwater homeowners take advantage of the historically low interest rates in the US. In Nigeria bridging the housing deficit may be the driving force.
According to housing industry sources, there is an estimated 17 million housing deficit in Nigeria. Filling this gap needs a good amount of liquidity, which only special intervention by government can guarantee. Not surprisingly, the Jonathan led administration came up with the country’s first mortgage refinancing institution – Nigeria Mortgage Refinancing Company (NMRC) based on public-private partnership model. This has been entrusted in the hands Professor Charles Inyangete, an industry expert.
Inyangete came to NMRC with a clear vision of providing a level playing ground and creating the required market for all stakeholders in line with global mortgage best practices in refinancing towards becoming a world class institution. This vision, according to him, is predicated on four pillars – innovation supported by robust IT; integrity, as a hallmark of good governance; independence from undue external influence which will ensure the CEO and his team give their very best and; inclusion policy that treats all stakeholders fairly.
The background and experiences of Inyangete in the financial markets and real estate sector will help him steer the affairs of the NMRC very well. At various times, he served as Chief Executive Officer of Integrated Risk and Investments Services Ltd., Non-Executive Director of Group Africa Growth Holdings; and as Director of Exim Bank (Tanzania) Limited until August 2008. He was previously Professor of Finance at the Institute of Financial Management in Dar Es Salaam, Tanzania, and holds Ph.D. in Finance from University of Strathclyde.
On what Nigerians are to expect of the NMRC in the next five years, he said: “In the next five years, we have projected that we will refinance close to the region of 400,000 to 450,000 mortgages for one segment of the market. When we go down to the lower segments of the market, we expect to refinance proportion larger than that number. So Nigerians can expect to see mortgages refinanced in their hundreds of thousands perhaps close to a million in that period, depending on the buoyancy and vibrancy of the market and their activities in that period.”
Like elsewhere in the world, NMRC is a private sector driven company with the singular purpose of developing the primary and secondary mortgage markets by raising long-term funds from the domestic capital market as well as foreign markets and thereby provide accessible and affordable housing in Nigeria.
Accessible and affordable housing stimulate growth of the economy in many key sectors – manufacturing, services and employment – but more importantly it promotes welfare of the citizens as it addresses one of the most basic needs of mankind – shelter. Little wonder that among the mortgage refinancing programs introduced by Obama administration is the Veteran’s Administration Loan Refinance programme that targeted the welfare of US Veterans – an important segment of the US citizenry.
The programme offers Interest Rate Reduction Refinances (IRRR) for Veteran Home Owners who simply want to reduce their interest rate, with no appraisal. Apart from VA loan refinance, there re others such as the Home Affordable Refinance Program (HARP), USDA Home Loans and FHA Streamline Refinance, all targeted at making home ownership easier for different categories of people.
In Nigeria, the mandate given to NMRC is to provide primary mortgage banks (PMBs) with access to long-term finance at an affordable interest rate, which in turn will enable mortgages to be issued by these institutions to Nigerians at longer tenors and affordable rates. Consequently, the provision of mortgage loans at longer tenors will provide the average working class Nigerian citizens an opportunity to buy a home and conveniently pay for it over a reasonable period of time without hassles. Provision of adequate housing is one of the indices for measuring the standard of living of people. Therefore, any effort to address housing deficit is an effort towards raising the standard of living of the people.