Opportunity has opened for investors in search of good yield and home buyers seeking access to housing finance as Mutual Alliance Mortgage Bank (MAMB) is raising fund for that purpose.
The bank entered the market recently to raise N3 billion through an offer for subscription of 300,000,000 units of N10.00 at N10.16 in Mutual Alliance Mortgage Fund (MAMF).
The offer for the fund, which has 48-month tenor, opened on May 7 and will close on June 16, 2021.
The fund comes with a number of benefits for various stakeholders. To workers in government parastatals, particularly, it is a unique investment opportunity to access lump sum for equity contribution for mortgage loan, leading to owning a home.
It also gives an average civil servant access to a decent and affordable house which translates to the realization of the dream to become home owners.
The government also benefits from the fund as it minimizes the housing deficit, thereby solving one of the country’s socio-economic problems. The fund is expected to deepen the financial market and also limit employment-related migration from point A to point B.
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The fund offers unique investment opportunity for investors just as it leads to portfolio diversification to unit-holders and enables them to earn consistent returns, represented by the interest payment by the fund.
The hybrid fund, which is authorized and registered in Nigeria as close-ended unit trust scheme, has debt and equity component, assuring of 12 percent return on investment and dividend payment.
At a time when returns on investment assets, including the federal government Treasury Bill, is at their lowest, a 12-percent return on this offer is considered a good yield by investment analysts.
This, according to the promoters of the fund, adds to the aim of the fund which is to provide unit-holders or subscribers fixed and dividend returns on investment throughout the tenor of the fund.
“The fund represents a bridging finance to the beneficiaries of Federal Mortgage Bank of Nigeria (FMBN) housing fund packaged through Mutual Alliance Mortgage Bank Limited for staff of federal government ministries, departments and agencies (MDAs),” explained Okon Amasi, MD/CEO of MAMB, at the opening of the fund offer in Lagos.
Specifically, the fund targets federal civil servants with the objective to bridge the housing gap in Nigeria by funding the equity contribution of beneficiaries of the FMBN’s National Housing Fund (NHF to the tune of 30 percent.
This is a huge relief to the beneficiaries because most civil servants find it difficult to provide this equity contribution due to their low earnings. The demand for equity contribution is a major reason mortgage loan is not accessible and affordable to many Nigerians, especially those within low-income bracket.
MAMB recognizes that Nigeria has a housing deficit which is variously put at 17 million, 20 million and 22 million depending on who one is talking to. The bank notes that this deficit is driven by Nigeria’s growing population, rising urbanization, consumption and growing middle class.
Given Nigeria’s estimated 2.8 percent annual population growth, it is expected that the housing deficit with current value of about $363 billion will be increasing by 2 million units per year.
“The mortgage market remains small, underdeveloped and costly with return on investment rates ranging from 18-30 percent and tenors of 1-6 years. Ratio of outstanding mortgage to GDP stands at 0.6 percent compared to 50 percent in Europe,” Amasi noted.
