What a ‘refinancier’ could do for mortgage market in time of pandemic
The Coronavirus (Covid-19) pandemic, a global health emergency that wrecked nations’ economies, was here and it is here again in what has been described as a second wave, claiming lives and instilling fear in the living.
Individuals, institutions and businesses are still smarting from the severe impact of the pandemic. Like other subs-sectors of the economy, the mortgage market is also taking a heat, hence the question as to what a refinancier like the Nigeria Mortgage Refinance Company (NMRC) could do to help the market.
As household income dips, people are less inclined to make deposits or take loans. Mortgage banks which thrive on customers’ deposits are also unwilling to give out loans, where possible, for fear of default. This simply says it all that, with coronavirus, everybody is a victim.
Liquidity is a major issue today for mortgage banks and their operators, and this is why expectation is high that NMRC, with its mandate to increase liquidity in the mortgage system, should rise to the occasion this time by encouraging more mortgage origination.
When the NMRC was established, central to its mandate was to change the mortgage market narrative so that the major barrier to owning homes in Nigeria would be removed by bringing more people into the mortgage net by making mortgage accessible and affordable. Right now, it is not.
Over time, the mortgage refinancing company has been busy forming alliances, raising bonds, refinancing mortgages, signing partnership agreements, going into joint ventures with private sector operators and state governments. Though it has not been easy, the company is not resting on its oars.
Riding on the relative success it has achieved since its establishment, the company is out on an aggressive drive towards the adoption of a model mortgage and foreclosure law by state governments.
This, according to its authorities, is part of efforts at growing a mortgage system that will drive housing affordability. Key pilot states for the mortgage law include Akwa Ibom, Anambra, Bayelsa, Delta, Edo, Enugu, Kano and Ogun states.
What the company is driving at, according to a source close to the company, is to get states houses of assembly to pass foreclosure laws as a prelude to mortgage-backed affordable housing delivery.
This is good news for home seekers who may need mortgage facility because foreclosure law, upon adoption, aims to fast tract the process for creating legal mortgages, ensuring timely resolution of disputes and creating an efficient foreclosure process.
Over the years, the company has demonstrated uncommon resolve to live out its mandate with refinancing of some mortgage institutions including Imperial Mortgage Bank Limited- a primary mortgage bank- whose existing mortgages were refinanced to the tune of N1 billion.
Mortgage operators have described this refinancing as a milestone and, according to Ben Akaneme, Imperial Mortgage’s former managing director, “this is an outstanding achievement in the march towards the realisation of affordable and single-digit interest rates for mortgages in Nigeria.
He assured that the bank would continue to strive to achieve its mission of enabling easily accessible and affordable mortgages to Nigerians in order to ensure housing for all.
NMRC came into the Nigerian mortgage market on a very high pedestal, promising a major shift in the interest rate regime in the market. But the authorities of the company have said that, though it is a partnership between the government and the private sector, the company operates as a private sector-led institution, relying on the market to determine interest rate on mortgage loans, meaning that the rate that applies to commercial loans also applies to its mortgage.
“The desire of NMRC, the Primary Mortgage Banks (PMBs) and the Central Bank of Nigeria (CBN) is to achieve single digit interest rate, but we are not there yet because the market does not allow single digit interest rate”, said its former CEO, adding, “as it is today, we cannot meet the single digit interest rate until we are able to reach that point where the market allows it”.
On his part, Kehinde Ogundimu, the company’s managing director and chief executive officer, assures that they would continue to grow and sustain the mortgage industry in spites of unfavourable economic climate locally and globally.
Though the company assures that whatever the rate is today, its desire is to drive it down to single digit, Nigerians, especially home seekers, expect the company, more than ever before, to do more this time when liquidity has become a big issue for players, especially the primary mortgage banks (PMBs).