Nigeria was recently overtook reported to have overtaken South Africa to become the largest economy in Africa after overhauling the GDP data in over two decades. As of today, Nigeria is the 24th largest economy of in the world. A lot bulk of that GDP has to be contributed to by the increasing construction and modern development activitiesy in the Nnation of the Super Eagles. And as the World Bank has extended an IDA Lloaned of US$300 million to Nigeria Mortgage Refinance Company Plc. (NMRC), we can expect the housing market in Nigeria to commence its ascent to flourishing.
The official GDP figures of the African Ccontinent in Year 2013 revealed that Nigeria hads a GDP of $503 billion, which is nearly double theto South Africa’s GDP of $350 billion. The country is set to make history as the NMRC has beenis set to be up and running by theas a private sector Company. Any mortgage refinance company is a secondary market vehicle for long term funds that are provided to mortgage lenders. And in the case of Nigeria, this could provide the much needed interim bridge step between a functioning secondary market and extending the maturity of liability base from of funding for Ddeposit Money Bankss i.e Mortgage and Commercial Banks in this wise..
Though the NMRC is the brainchild of the Mortgage Banking Association of Nigeria (MBAN), its take-off was subsequently facilitated by the Ffederal Ggovernment through the -Federal Ministry of Finance; and, it is expected to have a future in the long term in the private sector. Generally, as suchthes e institutions in the World, NMRC has its Shareholders in the Mortgage Banks; Commercial Banks, MOFI, SWF, IFC and Shelter Afrique mainly for the purpose of are owned by banks Mortgage for refinancing. Mortgage Liquidity CompaniesInstitutes provide direct funding through mortgage buying or through lending. NMRC will also provide liquidity support to lenders.
Focus on Standardization and Risk Management
Nigerian banksMortgage Originating Banks in Nigeria will definitely leverage on the facilities of NMRC, especially the ones that have healthy liquidity but lowscarcity in long term funding. Depending on the conditions of the market, NMRC will focus on self funding through issuance of standard Bbonds with five or more years of tenors a. And since NMRC will be the central refinancing channel, it will bring standardization to the Nigerian market. Standardization in a market accounts for greater transparency along with creating information systems on the market. As a result, this will improve the consumer regulation and risk management, and will reduce the risks in mortgage lending.
NMRC will introduce strengthen thea secondary mortgage market by promoting access to finance for affordable housing and the lending of local currency to bring much needed reforms to mortgage lending. On the face of it, NMRC has huge responsibilities to bring about a change in the housing market and mortgage refinance in Nigeria. However, if itonce its succeeds to do soin doing so, then expect the Nigerian real estate to become one of the dominating markets in Africa.
Benefits of NMRC
One of the most important benefits that the NMRC will bring to the housing market is that it willthe reinvigoration ofe the construction and housing sectors. The mortgage company will increase the provision of affordable housing throughout the nation;. The NMRC will promote liquidity in the local real estate market while and provideing a secondary mortgage market. This in return will increase the number of people that are able to build a homes or purchase one at affordable rates throughout the country as t. This is one of the major concerns that Nigerians had for a very long time. In fact the real estate market in Nigeria suffers a deficit of $16 million housing units. But with NMRC, they look to offer 30% deposit with 70% loan to value ratio over a period of the next 20 years. This of course will depend on the age of the property and other key factors, but overall these reforms come as good news of the Nigeria housing market.
According to the report, 14 Ppilot Sstates are earmarked for the initial phase of the program, and the Ggovernors of these Sstates have all agreed in to supporting the providing foreclosure arrangements, fast trackt land titles, procedures for transfer and provide service plots. NMRC is supposedslated to create in excess of 200,000 mortgages within the next five years at gradually reducingconvenient interest rates. This is more good news as Nigeria already has one of the lowest highest interest rates in Africaon Mortgage Loans.
The NMRC is looking to provide support to aid for the bottom of the economic chain, and hasas the Federal Government plans to restructure the Federal Mortgage Bank. This will help in providing lease- to- own and rent to own options to the mass population. This idea is to help Nigerian families own homes, with a long term view of attracting foreign investment toin the region.
The economy of Nigeria is dynamic, and the NMRC will help facilitate in creating more jobs for architects, engineers, electricians, painters, plumbers, interior designs, and much more. The NMRC will provide the Nigerian real estate as well as the economy with overall benefits, adding to add value to the already strong GDP.