N85m ceiling: Mixed reactions over minister’s directive to FMBN

MIXED reactions have continued to trail the directive by the Minister of Housing and Urban Development, Muttaqha Rabe Darma, to the Federal Mortgage Bank of Nigeria (FMBN) to increase mortgage disbursements and raise its loan ceiling to N85 million.

This, according to the minister, is part of efforts to improve access to affordable housing and strengthen Nigeria’s housing finance system.

The directive is meant to facilitate the approval of at least 2,000 mortgages annually, while allowing contributors to the National Housing Fund (NHF) to access up to 25 percent of their Retirement Savings Accounts (RSA) as equity contributions toward home ownership.

While some stakeholders in the industry welcome the directive, others said the major issue in the sector is not about ceiling but affordability.

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Real estate practitioner, Femi Oyedele said: “It is a good idea that the Federal Government has directed the Federal Mortgage Bank of Nigeria (FMBN) to increase mortgage disbursements and raise its mortgage loan ceiling to N85 million.

“The current paid-up capital base of the Federal Mortgage Bank of Nigeria,” he said, “was approximately N2.56 billion, which is considered grossly inadequate by housing experts in Nigeria.”

He noted that FMBN is actively pursuing a major recapitalisation drive targeting up to N750 billion to effectively expand housing finance and tackle the national housing deficit.

The directive by the minister, he said, would ensure that as many applicants as possible can access mortgage loans.

Recalling the role of the bank, he said: “The Federal Mortgage Bank (FMBN) of Nigeria was set up in 1977 primarily to serve as the apex mortgage institution, manage the National Housing Fund (NHF) and provide affordable housing finance.

“It was mandated to offer low-interest mortgage loans and estate development loans to Nigerian citizens and developers. It is also to serve as a wholesale credit provider to support primary mortgage banks and grow the secondary mortgage sector.”

With the latest developments, Oyedele expressed optimism that FMBN will be able to serve more people.

He urged the Federal Government to also intensify efforts to increase the capital base of the apex mortgage bank to N750 billion.

“While this move by the Minister is well appreciated, I can tell that the main issue is not even the ceiling but affordability,” another developer, who spoke on condition of anonymity, said.

He explained that his firm is involved in a number of mass housing projects under the cooperative window, adding that the hurdle before the civil servants who want to own the houses is centred on affordability.

According to him, many of the civil servants who have worked for over 20 years could not afford N25 million.

“We are involved in a number of mass housing projects presently under the cooperative window and the hurdle civil servants who want to own houses are facing is affordability. Many who have worked for over two decades are not even qualified to get up to N25 million,” he said.

To him, income level is a key factor, and not the mortgage ceiling.

Another stakeholder said the economic arithmetic showed that affordable housing would be far from being realised as long as the cost of building materials required for development continues to skyrocket.

According to him, the high cost will be transferred to tenants or new buyers.

“I think we need to standardise affordable housing designs, standardise the components for building the houses and get the government to provide developers with free land for social and affordable housing projects.

“We have the land mass. There is no subsidised land for affordable housing for low-income earners. And the government should inject resources into infrastructure that will take the burden off private developers. This is what low-income earners and developers should benefit from through the proceeds of fuel subsidy removal,” he said.

The new housing finance reform by the Federal Government is aimed at improving mortgage accessibility by directing the Federal Mortgage Bank of Nigeria (FMBN) to ensure that at least 40 percent of National Housing Fund (NHF) contributions are disbursed as mortgage loans.

The directive forms part of a broader reform agenda designed to strengthen housing finance, improve the utilisation of contributors’ funds and accelerate affordable homeownership across Nigeria.

The policy signals a renewed government effort to make the NHF more responsive to contributors while expanding access to long-term mortgage finance, an area widely regarded as one of the biggest constraints to housing delivery in Nigeria.