Mortgage Refinance & Securities Issuance
Mortgage Backed Securities
NMRC specializes in the issuance of Mortgage Backed Securities (MBS) in Nigeria by aggregating mortgage portfolios of partner banks for investors in the Capital Market to buy through its N400bn FGN guaranteed Bond Issuance Program. Through this NMRC raises long-term funds to boost liquidity in the mortgage market thereby empowering its partner mortgage lending institutions to provide longer term loans to potential homeowners.
This aligns with NMRC’s business mandate, which is to promote access to affordable housing finance in Nigeria by linking the capital market with the housing sector and establishing an operational and viable secondary mortgage market.
Since NMRC commenced operations, four years ago, we have successfully tapped the Nigerian Capital Market on two occasions to raise finance for the mortgage market.
First, in July 2015, NMRC successfully issued a 15-year N8 billion Series 1 Bond with coupon rate of 14.9% under its N440billion Medium Term Note Programme. By this act, NMRC made history as the first mortgage refinance facility in Africa to issue bonds to finance its operations. NMRC deployed the funds raised from the bond issue to the refinancing of the mortgage portfolios of its member banks.
To further boost liquidity in the country’s mortgage market, NMRC again in June 2018, successfully completed an N11billion Series II Bond Issuance. The order book was subscribed by over 200 percent. Net proceeds of the bond issue will again be deployed to the refinancing of conforming mortgage portfolios of its member banks.
So far, NMRC has raised N19billion through Bond Issuances from the Capital Market to refinance mortgage portfolios of its member banks. The resulting improved liquidity in the market is empowering mortgage lenders to for the first time give commercial mortgage loans that are payable over 15-20-year periods at significantly lower interest rates per annum.
The Nigeria Mortgage Refinance Company(“NMRC”) is a Public Private Partnership arrangement between the Federal Government of Nigeria and private sector. It is a component of the Nigeria Housing Finance Programme initiated by the Federal Ministry of Finance in collaboration with the Central Bank of Nigeria (“CBN”), Federal Ministry of Lands, Housing & Urban Development (“FMLHUD”) and the World Bank/IFC.
The Nigeria Housing Programme seeks to address the key barrier to developing accessible and affordable housing in Nigeria. It is designed to be implemented with parallel funded projects in land registration and construction sectors by the DFID and GIZ (Deutsche Gesellschaft fur Internationale Zusammenarbeit GmbH).
NMRC provides mortgage-lending institutions with access to long-term finance at an affordable interest rate, thereby enabling mortgages to be issued by these institutions to Nigerians, at longer tenors and affordable rates. The provision of mortgage loans at longer tenors will provide the average working Nigerian citizens an opportunity to buy a home and conveniently pay for it.
The World Bank approved a concessional US$300 Million 40-year interest free International Development Association (IDA) loan to facilitate the execution of the Housing Finance Programme. US$250 Million of the IDA loan was disbursed in instalments to NMRC as Tier 2 Capital based on key performance indicators — it will be retained on NMRC’s balance sheet to provide credit support for NMRC’s bond issuances.