MBAN receives approval for mortgage interest repayment system

MBAN receives approval for mortgage interest repayment system

• As operatives seek amendments to the NHF Act, statutory contributions are also

In response to the economic decline, the Mortgage Bankers Association of Nigeria (MBAN) has obtained approval from the Central Bank of Nigeria (CBN) for an interest rate matching fund in an effort to reduce interest rates on loans.

The novel idea, known as the Mortgage Interest Rate Reduction Program (MIDP), is an interest rate management framework that lowers effective borrowing rates without introducing a dual interest rate regime or contradicting the government’s existing deregulatory policies.

Under this system, mortgage banks would borrow from lending banks at market-determined interest rates, but the program would provide the lending banks with a predetermined percentage interest rebate if the loans were repaid on time. will be provided.

Acknowledging this development, MBAN Governor Mak Yoroki Ebirathe said the Federal Government remains proactive in taking steps to increase product-based home loans that ensure that housing finance is no longer channeled through short-term facilities and commerce. I hope that you will take action. loan.

Mr. Ebileto, Managing Director of Citycode Mortgage Bank Limited, said although Nigeria Mortgage Refinance Company (NMRC) has double-digit product interest rates, it also offers benefits to people who are not interested in product-based home loans. He explained that they offer competitive interest rates.

According to him, the implementation of a new policy approved by the federal government through its agency, the National Pension Commission (PENCOM), on dedicating 25% of retirement savings to mortgage equity contributions, will have a positive impact on the mortgage index. It is said to have had an impact.

“This is already creating momentum in the mortgage subsector and will push up both mortgage rates and volume. We are confident that mortgage rates will be lower than they are now in the coming days. ” he said.

President MBAN called for constitutional amendments to the National Housing Fund (NHF) Act and amendments to contributions to the National Housing Fund (NHF) to make it more effective. “Given the rapidly growing housing needs, contributing 2.5 per cent of his basic salary to the scheme represents a small pool of funds that may not have a significant impact on addressing housing finance needs. is the absolute truth, Nigerians.

“Additionally, given the economic realities of new developments, even 2.5 per cent of gross pay is by no means sufficient, so there is a strong need to review the scheme contributions upwards.

“However, be that as it may, the operation of the NHF scheme has recently undergone a significant internal restructuring which has resulted in shorter turnaround times for NHF loans, greater transparency in the scheme and more transactions.”

He said the review of the NHF Act, similar to the 2004 amended Pensions Act, would reignite the NHF scheme as it had great potential as a long-term pool of funds for housing loans in Nigeria. There is also great potential to pool funds for mortgage lending through compulsory contributions from workers.

“Considering the beneficial effects that reforms have had on pension systems, the significant growth in contributory pension systems since the enactment of the Pension Reform Law of 2004, estimated at N16.76 trillion as of December 31, 2022 , which fatally exceeds the total contribution to the NHF scheme over more than 30 years.

Mr. Ebirate called on the federal government to make the required statutory contributions to the scheme and implement legislation to guarantee similar contributions to institutional investors. “The provisions of the NHF Act require commercial banks to contribute 10 percent of the loan and prepay it at an interest rate of 1 percent per year above the interest banks pay on current accounts.

“Meanwhile, insurance companies are required to contribute at least 20% of their property and casualty funds and 40% of their life insurance funds to the NHF Plan. The state and federal governments are required by the Act to make periodic contributions to the NHF Plan. It is mandatory,” he said.


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