Nigeria’s 0.5% mortgage loan, one of world’s lowest —Report

When compared to other countries, mortgage loan as a percentage of Nigeria’s GDP is currently low at 0.5 per cent, a recent report compiled by mortgage experts has indicated.

According to the report, which was made available by online business platform, Proshare, Nigeria’s mortgage loan of 0.5 per cent falls low when compared to those of the UK, US, South Africa and Botswana whose loans are 80 per cent, 77 per cent, 31 per cent and two per cent respectively. But the report gave a hope for the future, when it indicated that over the next five years, the Nigerian Mortgage Refinance Company (NMRC) hopes to increase mortgage loans as a percentage of Nigeria’s GDP to two per cent.

“Nigeria’s real estate market presents substantial opportunities as well as a number of risks for property investors. Existing problems such as poor access to credit and an underdeveloped mortgage market are areas that would need to develop in the near future in order to move this sector forward. In Q3 2015, the real estate sector grew by 2.1 per cent y/y compared with 5.9 per cent recorded in the corresponding period in 2014,” the report said.

“The sector has been known to grow at a faster rate. In the past eight quarters, it has expanded at an average of 4.8 per cent. We attribute the sluggish movement to the current macro challenges,” it further noted

The report also identified building costs in Nigeria, when compared to other countries, as being very high, saying this is usually passed on to consumers in the rental and real estate market. “The cost of building a three bedroom apartment runs up to $50,000,”  compared with $36,000 in South Africa,” it said.

The report also indicated that in its attempt to boost liquidity in the mortgage market in order to improve access to affordable housing, the NMRC issued an N8 billion 15-year fixed rate bond with a coupon of 14.9 per cent under a N140 billion medium-term note programme. Proceeds are to be deployed for mortgage refinancing.