Pension Funds can solve mortgage problem —Expert

A housing expert and Managing Director of a primary mortgage bank,  Sun Trust Bank, Muhammad Jibrin, has suggested that the use of pension funds could help solve the nation’s mass housing deficit by serving as a long term funding for primary mortgage institutions.

Jibrin made this disclosure recently in a chat with the media, where he pointed out that when judiciously put into such use, pension funds could help by providing funds to bridge the acute shortage in the supply (particularly those targeted at the low income to middle class).

“Due to its capital intensive nature, housing development can hardly be financed from the private savings of intending home-owners and real estate developers, without recourse to providers of finance,” he said.

Also according him, in the recent past, most homebuilders sought finance from informal sources such as traditional thrift societies, cooperatives, friends or family. “These sources generally did not require collaterals, relying more on third party guarantees, and peer pressure as well as moral suasion to ensure repayments,” he added.

Speaking further, Jibrin noted that many of the housing corporations in the states and agencies established for housing provision usually sourced their funds from the money market, the commercial banks, at market determined rates, a development which he insisted was not good for the sector.

“The effect of this is high cost of housing, which consequently impacts negatively on the hopes of Nigerians to own their houses at affordable prices. It is in the light of the above scenario that maximum advantage of the capital market must be explored to provide a steady source of finance to the housing sector on a long-term basis,” he said.