Mortgage system still failing millions despite reforms — Adewole

Nigeria’s housing deficit, estimated at over 20 million units, continues to widen despite a series of government-backed interventions aimed at expanding access to affordable homeownership. Although initiatives such as the National Housing Fund (NHF), the Mortgage and Real Estate Investment Fund (MREIF) and the Family Homes Fund have been introduced to deepen mortgage penetration, affordability constraints, high interest rates and structural inefficiencies continue to limit impact. In this interview with KENNETH ATHEKAME, real estate executive and economist, Bamidele Adewole, examines the state of Nigeria’s mortgage system, the gaps in recent reforms, and what must change to unlock mass housing delivery. Excerpts:

Nigeria’s housing deficit is estimated at over 20 million units. How central is mortgage financing to closing this gap?

Mortgage financing is fundamental. No economy has achieved broad-based homeownership without a functioning mortgage system. It allows households to spread the cost of housing over time rather than making outright purchases, which is unrealistic for most people.

In Nigeria, the challenge is not just availability but affordability and accessibility. There is demand, especially in urban centres, but the structure of mortgage products excludes a large segment of potential homeowners.

How would you assess recent government interventions in housing finance?There has been progress. Schemes such as the NHF, MREIF and the Family Homes Fund have helped lower entry barriers compared to commercial bank mortgages, where rates can reach 30 to 35 percent.

The NHF at 6 percent interest remains the most affordable option, but access has historically been slow and bureaucratic. Overall, the direction of policy is positive, but implementation and scale remain the real issues.

What are the biggest barriers preventing Nigerians from accessing mortgages?

The primary constraint is income. Mortgage lending is tied to the 33.3 percent debt-service ratio, which immediately limits eligibility for many households.

At the same time, construction costs, land prices and infrastructure deficits continue to push property prices beyond reach. Even where interest rates are relatively lower, the underlying affordability problem persists.

Why is mortgage penetration still low despite rising awareness?

Most mortgage products are structured for middle-income earners, yet a large proportion of the population falls below that threshold.

Beyond financing, there is also a supply-side problem. High development costs, expensive building materials, poor infrastructure and regulatory bottlenecks all feed into high final property prices. Until those structural issues are addressed, mortgage uptake will remain limited.

How can mortgage products be redesigned to improve access?

Interest rates need to come down further to have a meaningful impact on affordability. Even though 6 percent under the NHF and 9.75 percent in some interventions are improvements, they are still not sufficient at current income levels. The Federal Mortgage Bank of Nigeria should also simplify access processes and reduce documentation bottlenecks. In addition, the NHF loan ceiling, currently around N50 million, should be reviewed upward to reflect current market realities.

What impact have inflation and high interest rates had on housing demand?

The impact has been significant. Inflation has driven up the cost of construction materials, while high lending rates have increased the cost of borrowing. The combined effect is a sharp decline in effective demand. Many households that would ordinarily qualify for housing finance are now priced out of the market.

What lessons can Nigeria draw from countries with stronger mortgage systems?

The key lesson is the importance of effective public-private partnerships. Governments alone cannot fund housing at scale.

Models such as MREIF demonstrate how public capital can be combined with private sector efficiency to improve delivery. Where this balance is achieved, mortgage markets tend to deepen more sustainably.

How important is a secondary mortgage market?It is important, but Nigeria must first strengthen the primary mortgage market. Without affordability, accessibility and efficiency at the primary level, a secondary market will not function effectively.

The priority should be fixing the pipeline before expanding the financial architecture.

What is your assessment of the FMBN and NMRC reforms?

Progress is visible, but execution remains weak. The Federal Mortgage Bank of Nigeria still needs to significantly reduce processing timelines. The Nigeria Mortgage Refinance Company also needs to address its cost of funds to make refinancing more impactful for lenders and borrowers.

What trends are shaping Nigeria’s residential market?

Demand is increasingly shifting toward gated and fully serviced estates. Buyers are prioritising security, infrastructure and convenience over location alone.

This reflects broader concerns around urban infrastructure deficits and safety.

Can rent-to-own and cooperative housing expand access?

Yes. Cooperative housing schemes have already played a significant role, particularly in Lagos, in helping groups pool resources for homeownership. Rent-to-own models are also viable, but they require strong long-term funding frameworks and are best supported by government-backed structures.

What is the broader economic impact of mortgage expansion?

Housing has one of the strongest multiplier effects in the economy. It stimulates construction activity, creates jobs, drives demand for building materials and supports the non-oil sector. It also contributes to wealth creation and financial inclusion when properly structured.

What role can pension funds and capital markets play?

Pension funds are already contributing through regulated exposure channels, but their participation can be deepened.

Nigeria needs more housing bonds and real estate investment trusts to provide long-term capital for developers and reduce reliance on short-term bank lending.

How is technology reshaping the sector?

Technology is improving transparency across the housing value chain. Digital land registries, automated credit scoring and online valuation tools are reducing inefficiencies and limiting opportunities for corruption. This is making the sector more attractive to institutional investors.

If you could implement three immediate reforms, what would they be?

First, land title registration should be completed within 30 days to reduce delays in property transactions. Second, the use of local building materials should be expanded to reduce construction costs. Third, a one-stop approval system should be introduced to streamline development approvals for real estate projects.

What is your outlook for Nigeria’s mortgage industry over the next decade?

The outlook is cautiously optimistic. Recent reforms indicate stronger policy commitment to housing finance. However, sustained progress will depend on whether affordability challenges and structural bottlenecks are addressed decisively.

Can Nigeria achieve mass homeownership?

Yes, but only if housing is treated as a core development priority rather than a luxury sector. The government must provide enabling infrastructure and regulatory clarity, while the private sector focuses on efficiency and innovation. Without that alignment, mass homeownership will remain aspirational.