More homeowners underway as N1trn MREIF scheme kicks off

More Nigerians are seen on the way to owning their own homes as the federal government has kicked off the implementation of the Ministry of Finance Real Estate Investment Fund (MREIF) which is aimed at making home loans not only available, but also affordable.

MREIF, a N1 trillion low-cost and long-tenored mortgage option, was designed as federal government’s response to the country’s ballooning housing deficit estimated variously at 17 million, 20 million and 28 million units, depending on who is speaking.

Though a public sector initiative, MREIF is private sector-led with special focus on homebuyers and developers, aiming to create a more accessible and sustainable homeownership system.

“MREIF provides low-interest, long-term mortgages, up to 20 years; it is funded through a public-private partnership, with the federal government ensuring stability; it has flexible financing, meaning that it allows pension-backed mortgage options to ease homeownership,” Biyi Adekunbi, Head, ARM Investment Managers, explained at a media parley in Lagos recently.

ARM Investment Managers are the managers of MREIF which, according to the promoters, comes as a game-changer, bridging the affordability gap, offering subsidized long-term loans, and integrating pension-backed mortgage financing, and making homeownership easier.

Adekunbi disclosed that application process has commenced and invited interested applicants to fill out the forms online through an MREIF portal which the ARM has created. He added that the application process involved five stages.

The stages, he said, were the expression of interest, verification, mortgage pre-approval, home selection through a list of vetted properties and final approval and disbursement. “An individual could access a minimum of N45 million to N50 million and a maximum of N200 million,” he said.

Stressing that the fund offers mortgage interest rate as low as 12 percent and repayment tenor up to 20 years which would be issued through eligible financial institutions who would be pre-qualified, Adekunbi listed those whose who are eligible to apply as salaried employees in private and public sector.

He added that self-employed individuals meeting the income and credit-worthiness criteria and Nigerians in the diaspora looking to invest in homeownership could also apply.

Realising that rising inflation affects developers, making them unable to complete their projects, resulting in timeline delays outright project abandonment, MREIF is designed to provide off-take guarantees to such developers which would serve as a credit enhancement.

“This would enable them to approach construction lenders to raise construction finance for the development of residential homes,” Adekunbi assured, disclosing that the platform which has been designed for the application process holds a wide range of properties estimated at 2000 housing units.

Wale Odutola, an executive director at ARM, explained that the fund targeted at first-time home buyers in urban areas where there is huge housing deficit including Lagos, Abuja, Kano, Port Harcourt, Enugu, Abia, among others.

“For those who want to apply for the 25 percent of their RSA (Retirement Savings Account) balance as equity contribution, there would be an opportunity for them to also fill their forms on the platform which can be passed on to their PFA (Pension Fund Administrators),” he added.

Odutola noted that, currently, the pension fund industry sits on over N20 trillion, explaining that this fund is one of the structures that has been created to mobilize funding from this sector to address infrastructure challenges, in this instance, specifically homeownership.

“How the fund would address the homeownership issue will be through the provision of long-term, low-interest rate mortgages,” he said, noting that with this, the fund will be tackling the demand side of the transaction and also the supply side.

“And we are all aware of how challenging it has been for developers to raise funding for their projects. And what is currently obtainable is that developers try to sell their properties off-plan to raise funding for these projects.

And what we’ve seen happen in the last couple of months is a situation whereby, due to rising inflation, these developers are unable to complete the projects at the prices,” he noted, assuring that MREIF has come to address these challenges.