Ministry of Finance Incorporated (MOFI), the investment arm of the federal government; Family Homes Funds Limited (FHFL); and ARM Investment Managers on Monday unveiled plans to ease mortgage terms for federal civil servants using the MOFI Real Estate Investment Fund (MREIF) window.

Under the arrangement, civil servants are to secure mortgage facilities for home ownership below 10 per cent interest rate. This is aimed at continuously improving the terms for accessing mortgages under the MREIF for federal civil servants.

Managing Director of MoFI, Dr Armstrong Takang, who spoke on the initiative during an agreement-signing ceremony in Abuja yesterday, said it “was effectively implementing Mr. President’s vision to ensure that Nigerians own their own homes with dignity.

“In other words, they can own homes at interest rates that make sense. We made it very clear from that point that all efforts should be made to continue to lower interest rates.”

To address the equity contribution barrier, both MREIF and FHFL will jointly provide significant portions of the required mortgage funding, leaving homebuyers with a convenient equity contribution of only 10 per cent, Takang said.

The arrangement also reduces the interest rate for civil servants to a single digit.

The interest rate reduction strategy includes blending funding sources with varying cost of capital, allowing loans to be delivered at significantly reduced interest rates.

FHFL’s access to a funding line from the African Development Bank (AfDB) will play a vital cost-lowering role here.

Takang said as a mortgage scheme, a well-structured loan distribution and management plan had been proposed, which will feature engagement of Partner Mortgage Lenders to grant the mortgage loans, with all loans made to comply with the Nigeria Mortgage Refinance Company (NMRC)’s underwriting standards.

On the interest rates, Takang said, “We set no more than 12 per cent, and that effort will be made to continue to reduce that to lower figures. And today marks a very significant agreement, which is the coming together, a partnership between MREIF and the Family Homes Fund to bring funds that allow us to be able to own them to Nigerians.

“They can get mortgages at single digits, that’s below 10 per cent. And that’s what is symbolic and significant about this. And we’ll continue to do whatever we can to make sure that the cost of borrowing to Nigerians will continue to go down.”

Takang added, “How we’re able to do it, again, as an investment management company with our portfolio companies, we are constantly in the markets to find funds that are cheaper, whose interest rates are lower, so we can pass on those savings to Nigerians.

“And this is one of those that we’ll be working with Family Homes Fund to find funds that are much cheaper than we had before. And the savings from those cheaper funds are being passed on to Nigerians through lower-cost mortgages.

“Nigerians can go to their primary mortgage institutions to apply for these mortgages at these interest rates and we’ll make it happen. It starts immediately.”

Speaking on the plan, National Co-ordinator, MREIF, SaniYakubu, stated that the idea behind the agreement was to increase the number of platforms that could reach Nigerians and seek to, as much as possible, provide mortgages for practically all Nigerians.

Yakubu said, “The private sector is leading the charge. The fund managers are private sector institutions.

“The fund managers are also working with eligible financial institutions. These financial institutions have been in the industry, so they’re mortgage banks, they’re commercial banks that have been licensed by CBN to provide this service and they’ve been in this game for quite a while.

“So, Nigerians should have easy access and it shouldn’t be so difficult in any way, shape or form to access these mortgages. We’re starting the project with a pilot in principal key areas of the country.

“We hope that this will be a proof of the concept and will be concluded very soon and all the services can be spread to all the nooks and crannies of the country.

“On-boarded PFIs? Yes, we have on-boarded a number of eligible financial institutions and these eligible financial institutions, like I said, include commercial banks.”

Yakubu said the financial institutions also include mortgage banks. He added that there was quite a number on the commercial banking side and on the mortgage banking side.

“So, we are working with all of these parties that CBN has granted approval to provide mortgages,” he stated.

“How many are there? At the moment we are closing on over 10 such institutions and still working with more,” he said.

Yakubu stated, “As you would expect, closing such relationships requires signing agreements between parties. Some take a little longer than others to get their own internal approvals, but we would want at the end of the day to have relationships with all of the mortgage banks and all of the commercial banks that have tables and are open to provide mortgages to Nigerians.”

Executive Director at ARM, MounirBouba, said as fund managers, it was registered with the Securities and Exchange Commission (SEC) and basically followed the guidelines and the governance structure obtainable in the fund management industry.

Bouba said, “The MREIF Fund, the MoFI Real Estate Investment Fund is a fund that allows us for up to 75 per cent through a blended approach to issue mortgages at scale, long-term mortgages for Nigerians. But also to provide public guarantees for developers.”

He added, “We have had various engagements with the stakeholders from the valuation and we have reached an even lower mortgage rate than the one that the commission had.

“So, we signed an MOU that will allow Nigerians, basically, to borrow at less than 10 percent, single digit. And we will continue engaging some other stakeholders in the value chain.”

SOURCE:  thisdaylive.com