6 benefits FG’s new mortgage financing offers developers, home buyers

Before now, the federal government of Nigeria had made interventions in the housing sector to create solutions and institutions to make housing accessible and affordable, especially for low-income earners.

Recent efforts in this direction have seen the emergence of Family Homes Funds Limited (FHFL) and the Nigeria Mortgage Refinance Company (NMRC). Before them, there were Federal Mortgage Bank of Nigeria (FMBN), National Housing Fund and the Federal Housing Authority (FHA). In spite all these, access to housing remains a daunting challenge.

The ‘new’ President Bola Tinubu government, in apparent response to the housing challenge, is working through the finance ministry to implement what it calls Ministry of Finance Incorporated (MOFI) Real Estate Fund (MREIF).

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MREIF is a solution sponsored by MOFI and the federal government and developed in partnership with the private sector to address the need to deliver housing at scale by deepening the mortgage market and improving housing supply.

It aims to provide access to long-term low-cost mortgage financing at scale for Nigerians and also to support private sector developers in obtaining construction finance using offtake guarantees.

The initiative is expected to be a game changer as it is designed to do things differently from the earlier interventions, especially NMRC which is also a mortgage institution with public purpose, but private sector-led.

MREIF has some benefits it offers both developers and home buyers, making it a bit unique and different from the others before it. Among other things, it ensures:

1. Access to long-term, low-cost mortgages at low interest rates for up to 20 years

2. Credit enhancement to developers in raising construction finance for residential developments at scale

3. Seamless end-to-end application process on the MREIF platform from eligibility assessment to disbursement of mortgage loans

4. it functions as a catalyst for unlocking long-term capital from institutional investors at scale into the real estate sector

5. Sustainable approach to mobilising government intervention in addressing homeownership deficit.

6. Improvements in the real estate and construction sectors contribution to the overall economy, especially now that real estate has become the third largest sector in the national economy.

Unarguably, Nigeria suffers from a housing shortage in terms of quality and quantity. The numbers showing the housing situation in the country convey disturbing scenarios.

For instance, 53 percent of Nigeria’s estimated 220 million people live in urban areas. The country has an estimated 28 million housing units deficit. With its fast-growing population, Nigeria is expected to be the world’s third-most-populous country by 2050, with close to 400 million people.

In his presentation at BusinessDay annual Property Investment Conference 2025, Lanre Olutimilehin, Strategic Adviser at Diya, Fatimilehin & Co, lamented that most of the urban population lives in slums. “Urbanisation, population growth, poverty and high levels of unemployment have all put strain on the country’s real estate sector and its ability to provide adequate housing,” he noted.

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The 28 million housing units shortage, according to him, is concentrated in the affordable housing segments of the industry and, therefore, impacting low- and middle-income earners.

“Estimates of the present level of supply are as high as 100,000 annually (which is possibly overstated). Some estimates say that, to bridge the deficit, Nigeria will need to produce as many as one million houses annually,” he said.

He added that the high cost of end-user finance, including mortgages, contributes to the high cost of housing, pushing the cost above the affordability threshold of most households in Nigeria.

He affirmed that, in Nigeria, mortgages are unattractive and unaffordable to households and housing developers due to high interest rates and high equity contribution requirements

At the moment, mortgage-to-GDP ratio in Nigeria is 0.5 percent which makes it one of the lowest in the world. The target mortgage-GDP-ratio now is 5 percent by 2025 and15 percent by 2030