Real estate developers have said
that the success of the newly-established Nigerian Mortgage Refinance
Company (NMRC) depends largely on sustainable capital flow and strict
regulation, describing these as veritable tools for meeting the
company’s target of increasing homeownership level through an effective
mortgage system.
NMRC, a secondary mortgage institution,
was set up with the primary aim of increasing liquidity in the mortgage
system, leading to affordable housing finance. It is expected to be a
focal point for creating an enabling environment for housing finance by
providing long-term funds to be given at low interest rate.
Since its registration by the Central
Bank of Nigeria (CBN), with the expected disbursement of the $300
million interest-free loan from the World Bank yet to commence, industry
players are of the opinion that a sustainable capital flow and strict
regulation of primary mortgage institutions are key to the company’s
sustenance.
“Though the company won’t directly
disburse funds to lenders, but through mortgage institutions, the
quantum of funds and success will largely depend on its capacity to keep
on having access to capital so that it can sustain lending to these
institutions,” Adetokunbo Ajayi, managing
director/CEO, Propertygate Development and Investment plc, told
BusinessDay on the sidelines of the firm’s recent Annual General
Meeting.
Ajayi further argued that the commendable
initiative, which remains a scratch on the surface of the country’s
mortgage industry, would also demand strict enforcement of rules and
regulations to ensure it achieves its target.
“The mortgage institutions who have the
sole responsibility of lending to intending homebuyers should be
effectively regulated to ensure they play according to the rules by
lending only to genuine borrowers,” he emphasised.
He further argued that the absence of an effective mortgage
system had not only slowed homeownership rate in the country but had
also compelled real estate developers to create an ‘artificial mortgage’
system through credit arrangement, with resources that should have been
employed for subsequent developments.
“For instance, you have developers demanding for just 50
percent of the total cost of a housing unit, while the balance is paid
with minimal interests,” Ajayi said, adding that an effective mortgage
system would address such situations.
Weyinmi Edodo, CEO, International Property Development
Consortium (IPDC), in an earlier interview with BusinessDay, had noted
that for the newly-established company to act as a catalyst in growing
the country’s real estate sector, “the regulatory body has to be on top
of the process and see that the mortgages are real; that the values are
real and not inflated just to get the money out and be diverted into
other ventures”.
“If things are done fairly, with real mortgages created, not ghost ones, and monies are used for properties and not
diverted, NMRC is a commendable initiative that should drive boom in
real estate sales because of the affordable mortgage it promises,” he
added.
Edodo also argued that the NMRC would
help the real estate market to maintain some stability despite what the
economic outlook projects.
ODINAKA MBONU
Comments
Post a Comment