By Esther Alexander
Homebuyers in Nigeria are facing much higher costs of ownership in recent times due to the increased mortgage rate, double digits interest rates, exchange rates, and inflation among others.
The Federal Mortgage Bank of Nigeria recently lamented the impact of inflation on the cost of land and building materials, noting that N15m was currently not sufficient to construct homes in certain parts of the country
In another report, it was also revealed that the majority of mortgage banks are not financially viable to meet the needs of home buyers.
For many individuals and businesses, an increase in interest rates is significantly impacting affordability and investments in the market.
According to Nicholas Ogbedo, a Real Estate Developer, one of the major challenges affecting mortgages in Nigeria is the long processing period, high deduction rates by the National Housing Fund, and high-interest rates, among others.
“Why am I saying this? The time for processing is too lengthy, and a lot of deductions by the federal mortgage bank and NHF from civil servants is not being translated to housing.”
He emphasized the need for government to create a legal framework for mortgage houses, and reduce interest rates as it is applicable in other places.
In the same vein, Mr. Lopez Awa also added that a high mortgage rate is an effect of inflation and economic indices. Adding that as prices of other products increase, the mortgage will also not be an exception.
Mortgages are statutory in other nations; you get value for what you pay for, but he added reverse is the case here in Nigeria.
Indeed, mortgages with variable and adjustable rates are already experiencing a shift in the composition of their monthly payments toward their principal and interest rates. However, more needs to be done, to enable more Nigerians to participate in Mortgage schemes.