FG assures on14.5% borrowingrate forloans under newMortgage RefinanceScheme

Mortgageloans under the new mortgage refinance schemewould be accessedat 14.5 percentinterestrate and is expectedto ease over time, BusinessDay has been informed.
Ngozi Okonjo-Iweala, the coordinating minister for the economy and minister of finance, said sheis also working to reduce extra charges on borrowings at statelevel from 16 percentto 3 percent.
Theseare in effortsto removing barriers to accessingmortgagein Nigeria, particularly accessto finance which led togetherthe setting up of theNigeria MortgageRefinance Company (NMRC), the financeminister said.
Meanwhile, many developers and builders are already raising concernsabout inadequate and non-availability of medium to long termfunds for constructionfinanceas a major constraint to housing delivery.
“This is something we are looking into seriously,” she assured, announcing that the World Bank is currently working with the Real Estate DevelopersAssociation of Nigeria (REDAN) to developa Guarantee Fund that will enable developers to accesslonger termfunds for constructionat reasonable rates.
The guaranteeprocess, she said, can unblock the bottleneckscurrently faced by developers, hence enabling them address the current deficit in housing supply in Nigeria.
The Federal Government, throughthe Federal MortgageBank, is also working in partnership with private developersto establish a flexible homefinancemechanism like rent-to-own schemewhich will enable Nigerians to ultimately own houses that they live in aftera number of years of paying rents. “We hope to kick-off this schemein the coming months.”
NMRC is essentially a refinancing mechanism which provides mortgagelenders with access to increasedliquidity and long termfinance, enabling them provide 20-year mortgages at affordable rates to borrowers.
So far, 18 stateshave signedup to the scheme, all assenting to review extant land titling, governor’s consentand property registration processesto facilitate greater home ownership.
Througha Memorandumof Understanding, Lagos State governor and the minister of the Federal Capital Territoryfor example, have signedup to review existinggovernor’s consent,titling and property registration processes.
This is in a view to reducing costsand fast-tracking the stepsto perfection of mortgages at the lands registries to thebenefit oftheir citizens in addition to enhancing revenue generationfrom volumesales of mortgages.
NMRC is also promoting legislative reform througha Model Mortgageand Foreclosure Law proposed for passageand adaptation by stategovernmentsto ensurethe timely resolution of mortgagedisputes and to create an efficientforeclosureprocess.
A UniformUnderwriting standard to govern mortgageorigination and administration has also been developed in partnership with the mortgagelenders, information from the finance ministry indicate.
The establishmentof the NMRC was supported througha World Bank/IDA credit of$250 million at zero interest, 40-year period and 10 years grace, and 0.7% commitmentcharge, to bedisbursed in 6 tranches as Tier 2 capital.
NMRC has also sofar raised N7.05 billion shareholders’ capital and will raise fundsin the capital market throughthe periodic issuanceof Federal Governmentof Nigeria guaranteedbonds to thetune ofN50 billion to institutional investors, with theoverall target of $5 billion in bond issuancesin the medium term.