Nigerians in the diaspora are currently taking advantage of a state-backed mortgage scheme aimed at increasing access to affordable homeownership. The funding is a product of the Ministry of Finance Incorporated (MOFI) via its Real Estate Investment Fund (MREIF) to provide a facility for Nigerians, home and abroad, to access housing loans up to ₦100 million with tenors of up to 20 years.
The fund was originally structured to provide a loan at an annual interest of 12 percent while allowing borrowers to contribute an equity of 20 percent but now offers an interest rate of 9.75 percent and an equity contribution of 10 percent. This adjustment has quickly attracted significant interest – particularly among Nigerians in the United States, United Kingdom, and Canada.
Stanbic IBTC Bank were the first to offer the facility to diaspora Nigerians, although other reputable financial institutions also supported the product, like Homebase Mortgage Bank, Imperial Homes Mortgage Bank, Infinity Trust Mortgage Bank, Access Bank, FCMB, Union Bank, LivingTrust Mortgage Bank. The participation of more financial institutions has delivered more access to Nigerians in the diaspora.
Officials have said that the diaspora interest experienced in this scheme is unprecedented. Femi Johnson, former president of the Mortgage Banking Association of Nigeria, observed that for the first time, Nigerians living abroad will be able to obtain mortgages at interest rates and processing times that are equal to or comparable to what they enjoy abroad. He went on to say that the reach of aggressive physical campaigns continued to rise with the broadening applications of online presentations and digital marketing via the social media platforms.
Borrowers will also now be able to draw upon some of their contribution from a retirement savings account administered by Pension Fund Administrators. Also, applications can be made jointly by couples. The tenor of the mortgage loan will remain a maximum of 20 years for salaried workers and 7 years for self-employed. The maturity of the loan is aligned with retirement age. Life and property insurance coverage is required as part of the loan, together with facility management and advisory fees.
MOFI has raised ₦250 billion for the fund, housing projects are in the process across Lagos, Abuja, Port Harcourt, Kano and Aba. Out of the 25,000 housing units delivered, more than half have been sold with a total of over 11, 000 gone. The fund provides guarantees for developers or offtake guarantees to stabilize offtake for housing and shaming all housing market stakeholders.
To further enhance inclusivity, a non-interest, shariah-compliant version of the mortgage product is under development, to bring on board Nigeria’s affected by faith-based financing layers, for Nigerians living outside the country and returnees. The fund has also increased its digital access channels to allow individuals the ability to register online, access verified properties, and receive pre-approval with a 48 hour timeline.
Other banks and mortgage institutions have also launched diaspora focused products, including the Federal Mortgage Bank of Nigeria, Access Bank and FirstTrust Mortgage Bank, suggesting the housing finance market is on an uptick within the country.
With a national housing deficit of more than 22 million units, all stakeholders recognize MOFI cannot resolve the housing crisis on its own, will it is a big step forward. By reducing transaction barriers and costs, and increasing transparency, MREIF will create more opportunities for Nigerians outside the country to invest in property and engage with their origins, advancing a sustained effort to close the national housing gap.