Mortgage and Housing trends
Inflation Inches Higher: The annual inflation rate increased to 11.98% in December of 2019 from 11.85% in the prior month, remaining at the highest level since April 2018. Housing and utilities recorded 7.7%, the same as in November 2019.
GDP Grows by 2.28% YoY in Q3: Nigeria’s GDP grew by 2.28 percent year-on-year in the third quarter of 2019 compared to an upwardly revised 2.12 percent rise in the previous period. It was the fastest expansion since the fourth quarter of 2018.
Credit to Real Estate Declining: NBS data indicated that commercial banks’ credit to the real estate sector dropped by 17% year on yar to N588.7bn in Q3 2019 from N710.2bn in Q3 2018.
CBN Outlines Priorities for 2020: The CBN listed its priorities for 2020 to include support for greater economic growth, price stability and low inflation. The bank pledged to continue its tight monetary policy stance and to establish a Bankers’ Charitable Endowment Fund.
MPC Maintains Status Quo: The Monetary Policy Committee meeting in November voted to hold all policy parameters including its monetary rate at 13.5% due to continued global macroeconomic uncertainty, and to protect the gradual improvements in the domestic economy.Rating Agencies Adjust Nigeria’s Ratings Outlook: Moody’s Investors Service changed the outlook on Nigeria’s ratings to negative from stable. Moody’s also affirmed the B2 long-term local and foreign currency issuer ratings, the B2 foreign currency senior unsecured ratings, and the (P)B2 foreign currency senior unsecured MTN programme rating were retained. While in a similar move, Fitch Ratings also revised the Outlook on Nigeria’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to Negative from Stable and affirmed the rating at ‘B+’.
Senate Canvasses Affordable Housing for Poor Nigerians: The upper legislative chamber of the national assembly has canvassed for the provision of affordable housing units for indigent Nigerians. It tasked its Committee on Housing to work out modalities with the various stakeholders in the National Housing Development sector to ensure the implementation of affordable housing sequel to the adoption of a motion on the “Urgent need to reform the Housing Policy and Mortgage Financing in Nigeria”.
Acquisition of Resort Savings & Loans: Camey and Rock Consulting Limited acquired 8,670,267,596 unissued ordinary shares of Resort Savings and Loans Plc for N4.3 billion to become the bank’s majority shareholder. Camey and Rock, with the acquisition, emerged the majority shareholder with 43.35% of the bank’s shares subject to regulatory approvals.
CBN Seeks Speedy Passage of Mortgage Foreclosure Bill: In order to promote virile mortgage and easy access to land for housing development, the Central Bank of Nigeria (CBN) is seeking speedy passage of Mortgage Model and Foreclosure Act by states. The apex bank will be working with the Nigerian Governors’ Forum and NMRC in promoting the mortgage model and foreclosure act enabling legal framework for states.
CBN Reviews LDR Target to 65% to Drive Lending: The CBN noted the growth in industry gross credit, which increased by N829.40 billion or 5.33% from N15,567.66 billion at end-May 2019. The CBN had increased the LDR ratio from 60%-65% of Bank deposits for loans, with stringent cash-reserve requirements for non-compliance to ignite economic growth.
Decline in Real-estate Contribution to GDP: Nigerian banks have improved non-performing loans (NPLs) post-recession. Real Estate, a significant component of GDP, has also recorded impressive moderation in NPLs, notwithstanding its declining contribution to GDP. However, study shows certain sector NPLs have deteriorated.
Nigeria Moves to 131 in World Bank Doing Business Ranking for 2020: The World Bank’s 2020 Doing Business Index (DBI) has ranked Nigeria 131 out of 190 countries, up 15 places from 146 position last year. The report, released in October 2019, also named Nigeria as one of the top 10 most improved economies in the world for the second time in three years.
Mortgage Banks & CBN Engage Over Expansion Plans: The Mortgage Banking Association of Nigeria (MBAN) started engagement with the Central Bank of Nigeria (CBN) for an expansion of the permissible activities for the banks in the revised operational guidelines. MBAN noted that the mortgage banking sub-sector in general needed to be more profitable and record higher Returns on Investment [ROI) to grow the business horizons and attract new investors.
Under the revised operational guidelines, primary mortgage banks were not allowed to grant consumer or commercial loans, leasing, estate agency or facilities management, project management for real estate development and management of pension funds/schemes.
CBN Publishes Mortgage Guarantee Operational Guidelines: The CBN set a minimum level of N10bn paid-up capital for Mortgage Guarantee Companies. A Mortgage guarantee firm is a financial institution established to provide guarantees or partial guarantees to lenders against losses resulting from borrowers’ default on residential mortgage loans. The objectives of MGC’s is to support primary mortgage banks and commercial banks to increase mortgage lending as well as guarantee residential mortgage loans.