Abuja: High mortgage interest rates pose a significant obstacle to housing affordability, particularly for low-income civil servants, according to the Real Estate Developers Association of Nigeria (REDAN). The REDAN President, Mr. Akintoye Adeoye, highlighted this issue in an interview with the News Agency of Nigeria (NAN).
According to News Agency of Nigeria, Adeoye expressed concerns about the soaring mortgage rates in the country, which have made it nearly impossible for low-income earners to own homes. He noted that although REDAN members are constructing mass houses at low-cost housing estates across various states, many low-income civil servants still face challenges in affording these homes.
“Mortgage rates in Nigeria are typically above 20 per cent, making it nearly impossible for low-income earners to afford home loans,” Adeoye stated. He emphasized that REDAN has been advocating for reduced mortgage rates, ideally between two to six per cent, to enhance affordability and increase homeownership among civil servants. However, the current financial climate continues to make it difficult for many to secure affordable financing.
The REDAN President pointed out that the Federal Mortgage Bank of Nigeria (FMBN) is currently the only institution offering affordable mortgages at six per cent. He stressed the importance of recapitalizing the bank to enable it to access more funds and provide affordable mortgages for Nigerians.
Adeoye underscored that mortgage accessibility is a major issue affecting housing today. Without a functional and accessible mortgage system, many Nigerians will continue to be unable to afford homes. He noted that the inadequate supply of affordable housing finance remains a significant challenge in the real estate sector, as developers rely on costly commercial loans, which raise the price of housing units.
The lack of accessible mortgage options has not only put financial strain on developers but also discouraged large-scale investment in mass housing projects. Moreover, the absence of low-interest funding exacerbates the challenge of housing affordability for civil servants.
The National Housing Fund (NHF) offers low-interest mortgage loans, but many civil servants either do not meet the eligibility criteria or encounter long delays in securing funds. This challenge is also linked to FMBN’s limited liquidity for NHF loan disbursement. Additionally, low salary structures often make it difficult for civil servants to meet mortgage requirements, leaving many unable to afford home ownership.
Adeoye called for a multi-faceted approach to address these challenges, including recapitalization of FMBN, policy reforms, and increased government support for real estate developers. Other strategies include enhanced financing options for both developers and homebuyers, lowering mortgage rates, and streamlining land acquisition processes. He reiterated that improving access to affordable housing finance is a critical step toward making homeownership a reality for low-income civil servants.