By Yinka Kolawole
The Federal Mortgage Bank of Nigeria (FMBN) is set to expand mortgage loan originators to on-lend National Housing Fund (NHF) loans to include universal banks, insurance firms, pension funds administrators and micro_finance banks.
Vanguard gathered that the Board of FMBN approved the plan to involve other financial institutions in disbursing the NHF loans subject to their meeting the criteria and requirements laid down for Primary Mortgage Institutions (PMIs) and the provisions of the enabling laws and regulatory authorities, in an apparent moveÂ to substantially boost housing delivery to Nigerians.
FMBN was established and commenced operations in 1978, following the promulgation of the FMBN Decree No. 7 of January 1977 as a direct Federal Government intervention to accelerate its housing delivery programme.
It was then given the mandate to expand and coordinate mortgage lending on a nation_wide basis, using resources from deposits mobilised from eligible contributors and equity contributions by the Federal Government and Central Bank of Nigeria (CBN) at rates of interest below prevailing market rate.
Currently in Nigeria, NHF the remains cheapest and most convenient source of mortgage lending for average earners, but still grossly inadequate. It was established by Decree No. 3 of 1992 to facilitate the continuous flow of low_cost funds for long_term investment in housing for the benefit of all Nigerians. The fund is managed and administered by the Federal Mortgage Bank of Nigeria (FMBN),which provides long_term housing loans to individuals through wholesale lending to primary mortgage institutions.
PMIs are to mobilize savings from the public and grant housing loans to individuals, while FBMN mobilizes capital funds for the PMIs. It is therefore possible for an individual to walk up to an authorized PMI to help him with the necessary application procedure for a mortgage facility.
A mandatory contribution from Nigerian workers in both the public and private sectors is required. It is added on a monthly basis of 2.5 percent to the housing fund. Mortgage loans are granted at a 4 percent interest to accredited PMIs by the Federal Mortgage Bank of Nigeria, for on_lending at 6 percent to NHF contributors over a maximum tenor of 30years.
To qualify for a loan a person must be a contributor to the fund for not less than 6 months, and must also have satisfactory evidence of a regular income flow to guarantee loan payment. The time frame in which an application is processed takes about 6 months and above.
The Board of FMBN also approved anÂ increase on mortgage loan accessible by an individual contributor to the NHF by 200 percent, to a maximum of N15 million, a radical improvement over the previous disbursable loan of N5 million.
It was further gathered that the board equally increased down payment or equity contribution of property value by NHF applicants in the following proportion: N5 million and below, 10 per cent; above N5 million up to N10 million, 20 per cent; while above N10 million up to N15 million attracts 30 per cent down payment or equity contribution.
The decision of the FMBN board to increase the NHF loan accessible by an individual may however be faced with funding challenges. This is because even at N5 million, FMBN could not mobilize enough funds to satisfy the applicants, not to talk about the expected increase in funds that will be required to take care of the 200 percent increase.
It would, however, be recalled that FMBN recently received federal government approval to negotiate a Euro medium-to-long term loan facility deal with London-based global bank, the HSBC Group, that is expected to inject $1.5 billion (about N225 billion) into the mortgage sector and thus enable Nigerians have easier accessibility to housing loans.