The Federal Government’s Nigeria Mortgage Refinance Company will reduce the interest rate on mortgage loans by commercial banks to about 13 per cent from between 18 and 22 per cent, the Mortgage Banking Association of Nigeria has said.
The NMRC, which will be inaugurated by President Goodluck Jonathan on Thursday, is a Federal Government Public-Private-Partnership initiative aimed at reducing the cost of mortgage lending by providing liquidity to fund housing development.
Mortgage lending in the country had been out of the reach of the middle and low income earners due to the high interest rates that had made housing finance expensive.
Currently, mortgage lending other than from the National Housing Fund is between 18 and 20 per cent, a development that has led to the widening of the housing deficit put at 17 million units as well as the growing slums in the urban centres.
When the initiative takes off, it will ensure that home owners refinance their mortgage expenses through the opportunity provided by the drop in interest rates.
The Federal Government had announced the decision to establish the mortgage refinancing company earlier in the year to address the housing challenges in the country with a soft loan of $300m from the World Bank’s International Development Association concessionary lending window.
According to the President of MBAN, Mr. Femi Johnson, there is an urgent need to increase the level of housing finance in the country to at least 10 per cent of the Gross Domestic Product as against the current 0.5 per cent.
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