Mortgage and Housing Trends

Note: Construction, Real estate and GDP Growth rates were derived courtesy of National Bureau of Statistics published data as part of its reports covering the period of Q1 2016 – Q4 2020.

Mortgage Bill to Raise Gross GDP by 51%: Proponents of the Institute of Mortgage Brokers and Lenders (IMBL) bill which has just passed its third reading at the House of Representatives, have said that when passed, it will increase Nigeria’s Gross Domestic Product by at least 51% on account of the economic inclusion impact the bill is expected to have across the housing finance market.

Investors Embrace Land Banking as Alternative: Notwithstanding the low contribution of the real estate sector to Nigeria’s Gross Domestic Product estimated at 7%, land banking has become a thriving investment option, especially for corporate real estate investors. The concept involves buying land in small or large quantities for a reduced amount, with the aim to develop such land or selling the same for more profit in future. Findings reveal that land banking has been in existence for decades and a goldmine, yet unexplored, but recently gaining popularity in the country. In an environment where investment opportunities are limited, people tend to look at land banking as an alternative investment option. Consequently, purchased land is banked until there is substantial increase in value on account of drivers like rezoning, population growth or municipal expansion.

Eastern Rail Corridor to Link 14 States: The federal government has shed more light on the benefits of the Eastern Rail Corridor while performing a virtual groundbreaking. The Eastern line is expected to stimulate economic activities along 14 states on its route.

N250bn Required to Manage Highways: The Federal Roads Maintenance Agency, has stated the agency would need between N200bn and N250bn annually to keep the federal highway network in manageable conditions.

FGN Okays Abuja-Kano Road Reconstruction: The Federal Executive Council on Wednesday approved the complete reconstruction of the Abuja-Kaduna-Kano highway. With the approval, the government changed the scope of work on the highway from the ongoing renovation to complete reconstruction.      

Note: NMRC Refinance Rate and Mortgage Interest Rate were derived courtesy of NMRC Analytics (in-house data and mortgage bank surveys) while other indices like MPR (Monetary Policy Rate), Inflation Rate and 10 & 20 Year FGN Bond were derived from the Central Bank of Nigeria, Debt Management Office and National Bureau of Statistics published data as basis for our comparative rates chart covering the period of January 2017 – March 2021.

Unemployment Increases to 33.3%: The number of persons in the unemployment bracket during the reference period of Q4, 2020 was 33.3%, an increase from the 27.1% recorded in Q2, 2020. The underemployment rate declined from 28.6% in Q2, 2020 to 22.8%. The unemployment rate among rural dwellers was 34.5%, up from 28.2% in Q2, 2020, while urban dwellers reported a rate of 31.3% up from 26.4%. In the case of underemployment among rural dwellers, it declined to 26.9% from 31.5%, while the rate among urban dwellers decreased to 16.2% from 23.2% in Q2, 2020. For the period under review, Q4, 2020, the unemployment rate among young people (15-34years) was 42.5% up from 34.9%, while the rate of underemployment for the same age group declined to 21.0% from 28.2% in Q2, 2020.  

Headline Inflation Increases: Inflation increased by 17.33% in February 2021. This is 0.86% higher than the rate recorded in January 2021 (16.47%). This is the highest inflation level in the last 48 months. Consumer price inflation jumped sharply since September 2019 after the land borders were closed to curb smuggling and encourage local production. Policy makers believe that structural issues are the core drivers of the problem alongside the impact of repressed market interest rates. 

Public debt rose to N32.9tn in Dec 2020: Nigerian States and Federal Debt Stock data as of 31st December 2020 reflected that the country’s total public debt portfolio stood at N32.92trn. Nigeria’s total public debt portfolio showed that N12.71trn or 38.60% of the debt was external while N20.21trn or 61.40% of the debt was domestic. While total States and Federal Capital Territory domestic debt profile hit N4.2tn with Lagos State accounting for 12.15% of total debt stock as of the end of 2020. Nigeria’s total public debt rose to N32.9tn at the end of December 2020 (an increase of N700bn).

MPC Maintains Status Quo: The Monetary Policy Committee (MPC) met on the 22nd and 23rd of March 2021 confronted with downside risks to the optimism for significant improvement in global output recovery in 2021 retained its hawkish stance and left all its indicators unchanged. This is the 21st time in the last 24 meetings that they have left parameters unchanged. Cynics fear that status quo decisions are becoming a ritual.

Fitch Affirms Nigeria at ”B” with Stable Outlook: Fitch affirmed a ‘B’ sovereign rating with a stable outlook on the FGN’s long-term, foreign currency obligations. The rating is one notch above S&P’s ratings review. According to ratings agency fitch, Nigeria’s ‘B’ rating is supported by the large size of the economy, a low Debt-to-GDP ratio, small foreign-currency indebtedness of the sovereign and a comparatively developed financial system with a deep domestic debt market. 

Increase in Fixed Income & Forex Trades: Nigerian fixed-income and currencies markets recorded transactions valued at N13.03 trillion in January 2021 with foreign exchange (forex) accounting for N3.26 trillion. This is indicative of funds still chasing returns as yields on fixed income instruments appear to be gradually rising while the Naira continues to witness slides at the Foreign exchange market. The continued fall of the naira at the parallel market and Investors’ and Exporters’ (I&E) Forex window has been linked to currency speculators hoarding dollars to profit from the currency crisis.

External Reserves Drop by $1.1Bn: External reserves dropped by $1.1Bn in February 2021, according to statistics obtained from the Central Bank of Nigeria. The reserves which stood at $36.19bn as of February 1 fell to $35.09bn as of end of March 2021.

CBN Defends Naira with $10.3Bn in Six Months: The Central Bank of Nigeria (CBN) defended the naira in six months with $10.3 billion intervention in the inter-bank foreign exchange market, its half-year report has shown.

CBN Raises SMEs Fund to N300bn: The Central Bank of Nigeria recently announced its decision to raise the Targeted Credit Facility for households and small and medium enterprises from N150bn to N300bn. It also stated that the bank had disbursed a total of N149.21bn to SMEs and households across the country under the TCF.

Nigeria’s Raw Materials Imports Rise to N2.32tn: Imports of raw materials into Nigeria rose to N2.32tn last year amid the COVID-19 pandemic from N1.34tn in 2019, according to data from the Nigerian Bureau of Statistics. The NBS said in its latest Foreign Trade Statistics report that the value of total trade in raw material stood at N762.6bn in the fourth quarter of 2020.

Consumer Confidence in Nigeria increased to -14.80 points in the fourth quarter of 2020 from -21.20 points in the third quarter of 2020. The Consumer Expectations Survey is based on a sample of 1800 households. Consumer confidence measures consumers’ tendencies and expectations for general economic conditions, job opportunities, and personal financial standing, as a determinant for disposable income availability and offtake for real estate and other services. The overall consumer confidence index is computed as an average of three measures: the outlook on macroeconomic conditions, family financial situation, and family income.

NMRC’s HouseAfrica in Collaboration with Domineum: HouseAfrica announced a strategic partnership with Domineum, an enterprise blockchain technology and back-end services provider. HouseAfrica’s PropVat.com, Africa’s largest property technology platform, connects real estate stakeholders, property developers, home buyers, financial institutions, valuers, and government regulators, to verify and validate property authenticity before purchase or credit application.

LivingTrust Mortgage Accesses DBN Fund: The Development Bank of Nigeria has given the first tranche of the N1 billion to the LivingTrust Mortgage Bank to disburse to Micro Small and Medium Entrepreneurs (MSMEs). The first tranche of N1 billion from the Development Bank of Nigeria (DBN) is meant for on-lending to MSMEs and Small Corporates across the country. The Management of LivingTrust, noted that the development was further to the appointment of LivingTrust as a partner bank for the development of the MSME sector by DBN in November 2020. This development places LivingTrust, a subsidiary of Cititrust Holdings Plc, among the few banks considered by DBN as possessing the requisite financial strength and governance structure to manage the MSMEs funds.

Brains & Hammers Issues N8BN Sukuk: Brains and Hammers Limited announced an eight billion (N8bn) naira investment from the private capital market. The N8bn SUKUK funding was made possible by a consortium of lenders in the private sector. The Issuance backed by ARM and Fidelity Bank, was noted by analysts as reflective of the investors’ vote of confidence in Brains and Hammers’ vision of providing affordable houses for Nigerians. This funding puts the company on course to deliver on its aggressive growth plan in affordable housing across the country. With the mega four thousand, five hundred (4,500) units Bungalow City in Abuja, Nigeria.