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 – Q1 2021.

FGN’s Proposed Grazing Policy & Land Issues: The Federal Government in June 2021 stated that it intends to revive grazing reserve routes in 21 out of the 36 states of the federation as policy to resolve the farmer/herder crisis across the country. The proposed policy has drawn criticism on account of its potential to exacerbate calls for secession and continued clashes for land and resource control with long term implications for the real estate supply and demand.

Experts call for Caution as EFCC Directs Focus to Real Estate: Following the recent comment by the Economic and Financial Crimes Commission (EFCC)’s that Nigeria’s real estate has become a haven of money laundering, with a promise to beam searchlight on the sector. While majority of the professionals supported the anti-graft agency in its fight to rid the nation of money laundering and other financial crimes, they are of the opinion that it can as well go ahead with its probes in the real estate sector without causing disruption to the industry. Nigeria’s real estate sector was in negative territory for 17 consecutive quarters since 2016 before experiencing growth sometime in 2020 before the pandemic.

REDAN & Shelter Afrique to Deliver 12,000 Housing units in Nigeria: Shelter Afrique has agreed to finance 12,000 housing units of housing in partnership with the Real Estate Developers Association of Nigeria, REDAN, under REDAN’s National Housing Development Programme tagged Rural-Urban Housing Initiative, RUHI-774. REDAN made this known in Abuja after the just concluded 40th Shelter Afrique Annual General Meeting in Yaoundé, Cameroon. Shelter Afrique had floated a N191Bn bond to finance housing delivery in Nigeria. The REDAN President explained that with the development, the Association was poised to deliver on its mandate to provide homes to Nigerians.

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 – June 2021.

Securities Issuances to Increase in H2 2021: Money market analysts have projected that Commercial Paper and Bond Issuances by government and corporates will increase in Q2 2021, as players are poised to take advantage of the low-yield environment to raise funds to support operations and pursue expansion plans. On a positive note, market players see prospects in Nigeria’s market potential as recent GDP growth of 0.51% in Q1 2021 is considered promising enough to encourage new issuers to the capital market. Despite the weak macroeconomic situation, the Nigeria capital markets continues to provide issuers with a platform that supports their strategic business objectives as Federal Government and corporates have raised a total of N4.6trn from the debt capital markets from January – June 2021.

SEC Proposes New Rule on Social Bonds: In its bid to drive increased market participation infrastructure development, the Securities and Exchange Commission has proposed new guidelines for the issuance of social bonds. These are debt instruments that the proceeds are exclusively applied to finance or refinance eligible projects with clear and identifiable social objectives.

FEC Approves N895.8bn Supplementary Budget: The Federal Executive Council has approved the draft 2021 supplementary budget of N895.842,462,917. The Ministry of Finance, Budget, and National Planning disclosed this during a state house briefing in Abuja.  

COVID-19 Vaccination and Oil Demand: The Organisation of Petroleum Exporting Countries has revised oil demand upwards following the progress in COVID-19 vaccination campaigns globally. The decision is driven by expectations that recovering demand with summer travel and the reopening of economies will easily accommodate the gradual increase in OPEC’s production quota.  

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.

Business Confidence in Nigeria decreased to -15.20 points in December from -1.50 points in November of 2020.The Business confidence Survey by the Central Bank of Nigeria is based on a sample of 1850 companies and provides advance indication of change in overall business activity in leading firms from the main sectors of the economy: Services, Industrial, Wholesale/Retail Trade and Construction. The overall index is computed as the percentage share of firms that have an “improving outlook” less percentage share of firms that have a “deteriorating outlook”.

NMRC Announces 2020 Financial Results: The management of Nigeria Mortgage Refinance Company Plc announced its 2020 financial results during its 7^th Annual General Meeting. The company noted that despite the disruptions caused by Covid-19 in 2020, NMRC’s operational and financial resilience enabled the company to deliver a decent performance during one of the sharpest economic downturns in our nation’s history. The company’s total assets at the end of 2020, was ₦85.4 billion, an increase of 17% from the 2019 balance of ₦72.9 billion while its capital adequacy ratio improved from 70% in 2019 to 80% in 2020, far greater than the regulatory requirement of 10%. Gross earnings decreased by 4.6% from ₦9.62 billion in 2019 to ₦9.18 billion in 2020 due to the significant drop in the yield on investments.

NMRC Partners World Bank on Electronic Mortgage Registry: The Nigeria Mortgage Refinance Company Plc as part of its market development initiatives partnered with the World Bank to conduct a study on the development of the Electronic Mortgage Assets Registry System (EMARS Initiative). This was disclosed at the post annual general meeting interview granted by the Chief Executive Officer of NMRC, Kehinde Ogundimu in Lagos. The CEO noted that the registry system would provide “timely and reliable access to land, public access to data about mortgage assets and facilitate due diligence for mortgage transactions”.

LASG Seeks inclusion of Property Auction in Mortgage Foreclosure law: The proposed amendment bill, when signed into law, will include sale by public auction, voluntary surrender of mortgaged property in lieu of foreclosure, and foreclosure in default of payment of mortgaged amount”. The Lagos State Government has commenced processes to incorporate the ‘foreclosure clause’ into the Lagos State Mortgage and Property Law to safeguard development of its real estate sector.

Credit to Private Sector Increased by N1.29 trillion in Q1 2021: Banks credit to Nigeria’s private sector increased by N1.29 trillion in the first quarter of 2021 to stand at N31.44 trillion. According to data from CBN, credit to the private sector increased from N30.15 trillion recorded as of December 2020 to N31.44 trillion as of the end of March 2021. Meanwhile, credit offered to the government declined by N410.7 billion in the review period. Total credit to the economy rose by N880.65 billion in the period under review, from N42.55 trillion as of December 2020 to N43.44 trillion at the end of Q1 2021. A further breakdown shows that commercial & merchant banks disbursed N660 billion in the period, microfinance banks (N130 billion), development finance institutions (N50 billion), and primary mortgage banks and finance companies disbursed a total of N10 billion.