MOFI disburses N22.5bn to banks for affordable housing initiative

THE Ministry of Finance Incorporated (MOFI), through its Real Estate Investment Fund (MREIF), has disbursed N22.5 billion—representing 9 percent of the fund’s net asset value—to five Eligible Financial Institutions (EFIs), comprising commercial and primary mortgage banks. The funds are for on-lending to 398 qualified home buyers at a predetermined interest rate, effective August 12, 2025.

Information from the institution noted that the mortgage loans will run for a maximum tenor of 20 years, with interest and principal amortised over the period.

The disbursement follows the Securities and Exchange Commission’s approval in October 2024 for ARM Investment Managers Limited to establish the N1 trillion MREIF programme. The pilot phase of N250 billion was launched in March 2025—comprising N150 billion in Series 1, fully subscribed by MOFI in January, and N100 billion in Series 2, raised from institutional investors via a public offer in March.

MREIF, a closed-ended real estate investment fund sponsored by MOFI, is designed to tackle Nigeria’s housing deficit of about 28 million units while providing affordable long-term mortgage financing and competitive returns to investors.

Initially, the fund targeted a blended mortgage rate of 12 percent, but in July 2025, it was reduced to 9.75 per cent to improve affordability and expand access. Home buyers’ minimum equity contribution was also lowered to 10 percent from 20 percent, effective August 1, 2025. MOFI agreed to a lower return on its concessionary investment to sustain targeted yields for Series 2 investors.

Beyond mortgage financing, the fund supports property developers with off-take guarantees—buying up to 40 percent of unsold units if developers fail to sell within stipulated timelines. These guarantees are backed by liquid asset reserves to ensure developers can meet creditor obligations. However, as of August 2025, no guarantees have been executed, with developers still undergoing onboarding and negotiations.

A digital MREIF platform has also been launched to connect home buyers, EFIs, and developers, streamlining property listings and transactions.

MREIF’s revenue streams include interest income from EFIs, investment income from liquid assets, and guarantee fees. Operating expenses are capped at 3.5 percent of NAV, with up to 90 percent of net income distributed as semi-annual dividends. Series 2 investors enjoy priority payouts benchmarked against the 10-year FGN bond yield plus 75 basis points, while Series 1 (MOFI) earns a minimum return of 1 percent.

In July 2025, MREIF paid its first dividend, delivering an annualised 19.27 percent return to Series 2 investors and 4.32 per cent to MOFI.

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