The Federal Government said on Tuesday it was working towards a template that would allow cost of mortgage finance in the country be reduced from 16 per cent to three per cent.
The Minister of Finance, Ngozi Okonjo-Iweala, said negotiations towards a consensus on the proposed template accounted for the observed delay in processing applications received from Nigerians who seek to own homes under the 10,000 Mortgage Finance Scheme launched recently by the government.
“There is no hidden agenda in the process at all. Those who do not qualify would also receive letters explaining why they were not able to meet the selection criteria,” the minister assured. “We trying to scale down the cost of mortgage finance from 16 to 3 per cent to make it affordable to ordinary Nigerians.”
“That is why processing the application has been delayed by about four weeks so that subscribers would not have to pay additional 16 per cent when they go to perfect their ownership titles.”
The minister, who was speaking at the Housing Stakeholders’ Consultative Workshop on Enabling Land, Finance and Concessions for Affordable Housing Delivery held in Abuja, said subscription in the
first phase of the programme exceeded the target by six times, with 66,412 applications received from prospective house owners across the country.
About 63 per cent of the total applicants were male, 37 female, while 10 per cent were from couples, with more than 92 per cent of the applicants in the public and private sectors of the economy.
More than 50 per cent of the applicants preferred homes located in Abuja, followed by Lagos with 18 per cent of the total, with people within the age bracket of 31-40 years accounting for more than half, followed by those in the 41-50 age group.
About 78 per cent of all the applications came from public sector employees, while 7 per cent were from self-employed subscribers, while others came from financial institutions, telecoms and media.
The Minister said shortly after the programme was launched, processing the applications had commenced to select the 10,000 successful applications in the first phase of the programme, but was compelled to order the suspension following a proposal received the Association of Mortgage Lenders.
According to the minister, rather than limiting the process to 10,000 applicants, the association had proposed that the entire 66,000 applications could be handled at once.
To realise that objective, she said the government had to develop standardized methods of selecting successful subscribers, while taking steps to resolve the issue of additional cost to mortgage finance.
So far, the Minister said 18 states have signed up to the scheme, by agreeing to review their land titles and scale down on their property registration process to make home ownership easy for subscribers.
Out of this number, she said memoranda of understanding (MOU) have been signed with the Lagos State government and the Federal Capital Territory, FCT, authorities to review their property registration process with a view to reducing cost and fast tracking steps to perfecting titles at land registries to benefit participants in the scheme.
“We are partnering with the state governments through pilot scheme to enhance the enabling environment for mortgage market to grow,” the minister said, adding that if discussion with Lagos and FCT become acceptable, it would become a template for the other states.
With the progress so far, Mrs. Okonjo-Iweala said the country was up to a fresh start with the Nigerian Mortgage Refinance Company NMRC, a public sponsored private institution established to provide mortgage lenders with access to increased liquidity and long term financing for housing projects at affordable rates.
As part of efforts to build capacity to play its role in the housing sector of the economy, the minister said the NMRC has so far raised N7.05 billion as shareholders capital.
Additional efforts, she said, would be made to raise over N59 billion funds from the Capital market through the periodic issuance of federal government-guaranteed bonds till it received its credit rating to be able source for funds from the money market.
“We want to see NMRC grow to become a $5billion institution in the medium to long term period, aimed at doubling that capacity in the long term,” the Minister said.
On efforts to strengthen the country’s housing sector, Ms. Okojo-Iweala said a proposal has been made for legislative reforms through the NMRC on model mortgage and foreclosure law for adoption by states towards timely resolution of mortgage disputes and creation of an efficient foreclosure process.
The government, in partnership with the mortgage lenders, she said, was developing uniform underwriting standards to govern mortgage administration, while giving attention to the issues of building standardization and uniformity in the quality of building.
Presenting an update on applications, the President, Mortgage Finance Association of Nigeria, Femi Johnson, said work was in progress, with some agencies already beginning to send out acceptances to customers.
Mr. Johnson said about 80 per cent of all the applicants have been contacted, with 50 per cent spoken to by phone, while others were contacted through email.
“About 40 per cent of the offer letters have been sent out since last week Monday. Others should await their offer letters in the next few weeks,” he said.
He assured subscribers that government was working to complete the process before the end of December, though he pointed out that people who fed the wrong information on their earnings and workplace may not qualify.