FG Sets Affordable 12% Interest Rate for N1tr Housing Loans.

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The Federal Government has launched a N1 trillion real estate fund to facilitate home ownership through low-interest loans at a 12% interest rate. This initiative aims to make housing more affordable by offering financing options below prevailing market rates, stimulating the housing market and increasing demand in the real estate sector.

According to Biyi Adekunbi, Head of Investment at ARM, an asset management firm, “At low rates and long term, we are talking about mortgages at 12% for up to 20 years.” These mortgages will be issued through pre-qualified financial institutions.

The fund, known as the Ministry of Finance Incorporated (MOFI) Real Estate Investment Fund (MREIF), is a $1 trillion government-backed initiative designed to provide long-term, low-cost mortgage financing for homebuyers and developers in Nigeria. Its primary objective is to address Nigeria’s housing deficit and create a more accessible and sustainable homeownership system.

The MREIF will be launched in series, with N150 billion already registered and fully subscribed to by the Ministry of Finance and the Coordinating Minister. The second series aims to raise up to N100 billion from commercial investors, specifically pension fund administrators.

Adekunbi explained that the fund would address the homeownership issue through the provision of long-term, low-interest-rate mortgages. “What the MREIF will do is provide offtake guarantees to developers, which will serve as a credit enhancement,” he said. This will enable developers to approach construction lenders to raise finance for residential home development.

Currently, there are over 2,000 housing units available, and homebuyers can conduct eligibility criteria checks to determine how much they can access based on their income, age, and equity contribution. “With that information, they will be able to view the properties they qualify for on the platform and apply for offer letters.”

“If they qualify, the developers would be able to issue offer letters for the properties for them on the platform.” Adekunbi said.

The MREIF is expected to have a significant impact on the housing market in Nigeria, making it easier for people to own homes and stimulating economic growth. With its innovative approach to mortgage financing, the fund is poised to address the country’s housing deficit and create a more sustainable homeownership system.

As Adekunbi noted, “The MREIF is a game changer for the housing market in Nigeria. It will provide access to affordable housing finance, stimulate economic growth, and create a more sustainable homeownership system.”

The launch of the MREIF is a significant step towards addressing Nigeria’s housing deficit and creating a more accessible and sustainable homeownership system. With its innovative approach to mortgage financing, the fund is expected to have a lasting impact on the housing market in Nigeria.

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