The Federal Government has announced a N1 trillion real estate funds aimed at facilitating home ownership through the provision of low-interest loans at a 12per cent interest rate.
This initiative is designed to make housing more affordable by offering financing options below the prevailing market rates.
The fund is expected to stimulate the housing market by enabling more individuals to purchase homes, thereby increasing demand in the real estate sector. This move aligns with broader economic strategies to boost home ownership and address housing deficits in the country.
The Head of Investment, ARM, an asset management firm, Biyi Adekunbi said though the program had been registered, however the fund would be launched in series. According to him, N150 billion has been registered and fully subscribed to by the Ministry of Finance and the Coordinating Minister adding that the subscription is a concessionary tranche, which is aimed at bringing down the interest rates that would be the mortgages.
The second level of the financing which is series two, Adekunbi said was mainly for commercial investors and the intention is to raise up to N100 billion from commercial investors, specifically pension fund administrators. According to him, currently, the pension fund industry sits on over N20 trillion. The Head of Investment said this fund was one of the structures that had been created to mobilise funding from the sector to address infrastructure challenges, in this instance, specifically, homeownership.
He explained that the Ministry of Finance Incorporated (MOFI) Real Estate Investment Fund (MREIF) was a ₦1 trillion government-backed initiatives designed to provide long-term, low-cost mortgage financing for homebuyers and developers in Nigeria. The fund, he said was aimed to addressing Nigeria’s housing deficit and creates a more accessible and sustainable homeownership system
The fund would address the homeownership issue through the provision of long-term low rates, low interest rate mortgages. “At low rates and long term, we are talking about mortgages at 12per cent for up to 20 years,” Adekunbi said adding it will be issued through eligible financial institutions that will be pre-qualified.
He said these facilities would be non-lending arrangements and would be created through eligible financial institutions in lending the mortgage facilities to qualified homebuyers adding the supply side is related to the provision of housing units to the scheme.
He said in the last couple of months due to rising inflation developers were unable to complete the project at the prices they’ve sold off-plant, resulting in undue losses and not being able to deliver the properties that they’ve committed to the homebuyers.
“What the MREIF will do is the provision of off-take guarantees to these developers which will serve as a credit enhancement. This will enable them to approach construction lenders to raise construction finance for the development of residential homes,” he said.
Adekunbi said this takes the pressure of committing to homebuyers at a low rate, and it also enhances their credibility because it’s a credit enhancement, and they’re able to raise sufficient funding to complete their project and sell at market prices.
He said currently, there were well over 2,000 housing units, and homebuyers would have the opportunity to conduct their eligibility criteria that individually confirm how much they are able to access based on their current income, their age, and how much equity contribution they have.
“With that information, they will be able to view the properties they qualify for on the platform, and then approach or apply for the offer letters for the property,” he said, adding that if they qualify, the developers would be able to issue offer letters for the properties for them on the platform.
