Government is yet to fashion out a suitable mortgage finance system that will ensure improved access to housing for Nigerians.

Minister of Lands, Housing and Urban Development, Ms Ama Pepple, stated this at a Mortgage Finance Roundtable recently held in Abuja, organised by the Central Bank of Nigeria (CBN) in collaboration with the World Bank and the United Nation’s Department for International Development (DFID).

She noted that mortgage finance remains a serious challenge affecting housing delivery in the country. “We, therefore, need to ponder on how to improve accessibility to mortgage finance in order to stem the present trend whereby most home owners in the country rely on their personal savings to build their houses,” she said.

According to the minister, Nigeria has one of the lowest mortgage penetration in Africa in terms of mortgage to debt at less than four per cent, adding that government needs to ponder on how to improve accessibility to mortgage finance in order to stem the present trend whereby most home owners in the country rely on their personal savings to build their houses.

“In spite of the growing mortgage market in Nigeria, the mortgage to debt ratio, which is a factor of mortgage penetration, is less than 4 percent. Using the figures published by the Africa 2011 Year Book of the Centre for Affordable Housing in Africa, Nigeria has one of the lowest mortgage penetrations on the continent in terms of mortgage to debt at less than four per cent. This is in comparism to South Africa at 30 per cent, Namibia at 20 per cent, Morocco at 15 per cent and Tunisia at 13 per cent.

“Other countries, such as Kenya, Rwanda, Botswana, Senegal, Algeria and Uganda also fared better on the scale in spite of their low ratings. The comparative figures for some developed countries and emerging economies are the United States, which is 82 per cent, Singapore 34 per cent and Malaysia 24 per cent as at 2009.

“In terms of income disposition, less than seven per cent households can afford to obtain mortgage loans even if it is spread over a period of 20 years, in view of the high poverty level. The funding of mortgages from short term deposits in the banking systems leads to the enthronement of high interest regimes and wide affordability gap in home ownership. Though loans sourced from the National Housing Fund (NHF) are much cheaper at six per cent interest, this is still considered high relative to what obtains in developed countries.

“Other challenges in the mortgage industry include undercapitalised primary and secondary mortgage institutions, lack of vibrant secondary market, and lack of common underwriting standards, low inflow of direct foreign investment, which is in favour of oil and gas, agriculture and solid minerals among others,” she stated.