How helpful are developers-lenders partnerships to home buyers?

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One of the brilliant ideas that real estate product suppliers always flaunt as bait to product buyers is the partnership that exists between them and mortgage lenders who, according to them, are there ready and able to give mortgage facility to the buyers.

Whenever there is a real estate event where these developers and lenders meet, a major sideline event is the signing of partnership agreements which leaves one wondering the purpose and the interest those agreements and partnerships are meant to serve, given experiences of mortgage subscribers.

Currently, a lot of things are changing in tune with unfolding realities and one only hopes that these new partnerships are coming to change what used to be the nature, character and intent of what was known of partnerships between estate developers and providers of housing finance.

Almost always, when experts, home seekers and sundry stakeholders gather to discuss the mortgage industry in Nigeria, the focus is generally on reasons for the slow growth of the industry and poor access to housing loans which they blame on high cost of funds, demand for high equity contribution by lenders, etc.

But there are more yet unknown. Oftentimes, little or no note is taken of other contributors to this slow growth among which is the huge stress which mortgage lenders pile on borrowers and the empty partnerships which some of the lenders deceive home seekers into believing  that they have with estate developers, giving false hope that they are just a few steps away from home ownership.

Part of the statutory functions of primary mortgage banks (PMBs) and mortgage lenders generally is to provide housing finance to those who need same to build, buy or renovate existing houses. But, in more cases than one, those who apply for loans from … Read More...

What mortgage can do in a struggling economy  

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When there are downsides in an economy such as Nigeria is passing through at the moment, everything and everybody is affected. Besides weakening the economy, economic downturn also weakens purchasing power of individuals and households.

The challenge of life and living in Nigeria is that the managers of the country’s economy don’t seem to have any clue to how to bring about a turnaround. The country appears to be mired in economic inertia.

This means that the hard times are not as much the challenge of everybody as they are the concern about what to do to bring about a turnaround. Of the multi-pronged approach so far adopted to get the economy on its feet again, mortgage, unfortunately, is not in consideration.

 In advanced economies, the mortgage industry makes significant contribution to economic development. But here, it is not the case because mortgage finance as a percentage of Gross Domestic Product (GDP), till date, is still as low as 0.5 percent which is several steps behind other economies including Mexico, Malaysia and South Africa where mortgage contributions to GDP are as high as 10 percent, 25 percent and 29 percent respectively.

Given what the government was able to able to do with mortgage in British economy, it means that mortgage has all the potential to stimulate the economy. But there are obstacles to the growth of the industry which have to be tackled.

 The relative ‘newness’ of the sector; lack of understanding of the dynamics and operational models of the sector by many Nigerians, and poor appreciation of the need and the ultimate benefit of keeping money in a mortgage bank are some of the militating factors.

Government can benefit a lot from a flourishing mortgage banking sector as it will help in regulating the … Read More...