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Mortgage Financing in Nigeria
Home ownership is everyone's quest. Citizens' ability to realize the dream of owning a house is probably a major indicator of the strength and relevance of a nation's socio-economic structures.
One of the key factors to home ownership is the access to mortgage finance. However in Nigeria it's quite a different story as the mortgage business is still at its lowest ebb. Mortgage loans within the context of home ownership schemes are primarily a commercial but secondarily social service offered by banks under special governmental regulation and incentives. The intention is to enable a mortgagee achieve his home-ownership whilst paying towards the specified periodic amount slightly higher than the rent payable to a landlord for a comparative property.
In developed countries and emerging economies across the world, home ownerships is mostly achieved through well structured mortgage schemes. If the mortgage systems are effective, invariably the procedure for accessing the funds are so simple that the prospective home owners only use the services of professionals as a formal requirement.
The mortgage institutions in Nigeria whose primary responsibility is to facilitate easy home ownership through long-term loans to interested individuals eager of owning their homes have not been able to render this service effectively. The need to expand mortgage lending on a national scale perhaps due largely to insufficient funding is very essential as findings showed that less than 10 percent of those who apply for housing loans to the Federal Mortgage Bank (FMBN) get favorable response.
The lingering lapse in the system could be perceived as a negation of the provisions of Decree 53 of 1989 which provided the regulatory framework for the establishment and operation of Primary Mortgage Institution (PMI) by private entrepreneurs. Under this arrangement the PMIs are to mobilize savings from the public and grant housing loans to individuals, while FMBN mobilizes funds for the PMIs to enhance private sector participation in housing finance. Thus, the number of people who have accessed mortgage facilities for home ownership is far cry from what it should be.