Moved by pitfalls in the mortgage market, the Chairman of FESADEB Media Group, Senator Osita Izunaso has disclosed that mortgage loans would remain at short-term with double digit interest rate if the federal government fails to initiate proper framework to boost the mortgage system in the country.
This is even as he regretted that underdevelopment of the secondary market has crippled access to funds saying that sourcing of funding must be explored through the development of instruments that would mobilise funds from the capital market.
Izunaso who disclosed this to newsmen in Abuja sought for reforms that would enable Primary Mortgage Institutions (PMI’s) access cheap loans from commercial bank.
According to him, “Commercial bank loans are un-incentive and worrisome with interest rate of between 17 -24 per cent compared to 3-5 per cent in other countries. How can such loans provide affordable housing”, he inquired.
He pointed out that funding remained the bane of construction industry stressing that expanding access to affordable housing in Africa required effective government policies, technology advancement, implementation, amendment and repealing of housing laws. Izunaso who represented Imo West (Orlu) constituency during the 6th National Assembly said that it was impossible to provide affordable housing without the utilization of new technologies that drastically reduce the cost of building and building materials.
He called on the Central Bank of Nigeria to direct commercial banks to contribute 10 per cent of its risk Asset portfolio to Federal Mortgage Bank of Nigeria (FMBN) as contained in the NHF Act.
“The cooperative societies are also necessary to encourage savings and loan associations to finance genuine low-income housing since they enable small individual savings to be pooled into collective mortgage funds.