What must change to make affordable mortgage possible, accessible

Unlike advanced economies, where it is given, mortgage in Nigeria and, indeed, most of Africa, is a daydream, and those who desire it simply indulge in wishful thinking.

This is because, as an immature economy, policies in Nigeria change frequently, disrupting long-term planning and investor confidence. For instance, inconsistent foreign exchange policies affect lenders with dollar-denominated funding.

Similarly, shifts in regulatory capital requirements, monetary tightening, or sudden withdrawal of subsidies directly impact mortgage pricing and supply. Leapfrog

Experts are of the view that long-term housing finance thrives in stable, predictable policy environments which explains why they canvass dialogue between the government and mortgage stakeholders.

For affordable mortgage to be possible and accessible to those who need it, the government-mortgage stakeholders dialogue is not only urgent, but also essential to create enduring frameworks.

Additionally, some lessons have to be learnt from successful housing finance models around the world that can offer valuable insights for reforming Nigeria’s mortgage system.

“One critical lesson is the role of government-backed guarantees, such as those provided by the Federal Housing Administration in the United States. These guarantees reduce the risk for lenders, making them more willing to extend long-term credit, particularly to first-time and low-income buyers,” Adedeji Ajadi, CEO, Mortgage Banking Association of Nigeria (MBAN), said.

Another thing that has to happen, according to Ajadi, is the development of secondary mortgage markets, which help to free up capital for new lending. He explained that, by allowing mortgage lenders to sell off existing loans, they can recycle funds and maintain liquidity, ultimately expanding access to mortgages.

Adedeji, who is also the executive secretary of the association, added that inclusive credit scoring also emerges as a transformative approach, pointing out that in many advanced markets, lenders increasingly rely on alternative data, such as rent history, utility payments, and mobile money transactions, to assess creditworthiness.

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“This broadens the pool of eligible borrowers, particularly those in the informal sector who may not have traditional credit records. Subsidised interest schemes targeted at low- and middle-income households further enhance affordability,” he explained.

It is expected that these these programmes reduce the effective interest rates on mortgage loans, making monthly payments more manageable and encouraging uptake among underserved demographics.

Digitising land registries is another game-changing reform, because by reducing fraud, ensuring transparency, and speeding up property verification, digitised systems allow for quicker loan approvals and greater investor confidence in the housing market.

To achieve this goal, integrated housing-finance strategies are crucial. Successful systems align housing finance with urban planning and development efforts. This means coordinating land use, infrastructure development, and mortgage financing in a holistic manner to ensure sustainable housing delivery.

Collectively, these lessons point toward a more inclusive, efficient, and scalable housing finance ecosystem, one that Nigeria can adopt to meet the growing needs of its population.

A functional mortgage system depends, to a large extent, on interest rates in the financial system. In Nigeria, the rates are just too high at between 17 percent and 27 percent. Ajadi suggests that to effectively bring down these rates and extend loan tenures in the mortgage market, some steps have to be taken.

“An ensuring access to long-term capital is crucial. This can be achieved by deepening the secondary mortgage market through institutions such as the Nigeria Mortgage Refinance Company (NMRC), which plays a vital role in providing long-term liquidity to mortgage lenders.

With more refinancing options available, lenders are better positioned to offer affordable and longer-term mortgage products. Secondly, subsidised financing must be part of the solution. Government interventions, including special interventions like MREIF and Family Homes Funds, targeting low- and middle-income earners, can significantly reduce the cost of borrowing, making home ownership more accessible to many people,” he said.