Mortgage banks are taking steps to ensure that more Nigerians have access to cheaper loans to enable them own houses. In this interview with COLLINS NWEZE, Imperial Homes Mortgage Bank Limited Manager Mrs. Ronke Akinleye speaks on steps taken by the bank to ensure that more Nigerians access mortgage funds to build their houses. She also speaks on the need for policy review that would allow mortgage banks take over property of homeowners who fail to pay their loans to ensure more compliance.
everyone wants to own a home, but this is not easy. What does it take for one to get an affordable home?
When you look at the three major needs of a man, home is one of such critical needs. For us at Imperial Homes, we have identified needs in the mortgage industry, and came up with products that can suit different categories of people. If you earn N100,000, we have the National Housing Fund that you can take which is very, very affordable in tenor, and also very attractive pricing. The National Housing Fund loan takes a maximum of 30 years, depending on your age and is at six per cent. If you earn as low as N100,000, you can actually afford such loans. At Imperial Homes, we have also created a product called Vantage Homes, which is also priced at 14 per cent. You know, owning a home is something you have to plan towards.
The way the product works is simple. There are different categories of the product. You have the gold, silver and platinum, and the Flex. You have to contribute a minimum of 30 per cent. So, you can take up to N18.5 million loan from banks at 14 per cent. We have been able to do a research on our own to determine what an average Nigerian needs. Many people are not even aware of what mortgage is all about. If you come to me as a prospective customer, I will ask you certain questions, to be able to advise, on the best mortgage funding that suits your income.
Is the National Housing Fund (NHF) accessible to prospective home owners?
It is. It is possible. Here, we have been able to process NHF for a lot of people. We have done close to N2 billion in NHF. So, it is something that is easy, and affordable, if you bank with the right mortgage bank. May be a lot of people do not know how to go about it. That is one thing that in Imperial Homes, we are trying to educate our customers on. Although it has its own challenges, the Federal Mortgage Bank is working to make some of its processes automated so that the turnaround time is also attractive to people. Before now, you can be there for two years and still waiting on the loan. But they have tried to automate their processes, so that people can have access to these loans.
On your own part, is the NHF available for clients to access?
It is on demand since we do not warehouse the funds. It operates on need basis. You have a customer that wants to buy into different products, you have been able to categorise them into different batches, profile them to determine if they can afford whatever amount they are taking. Put your applications together, forward it to Federal Mortgage Bank of Nigeria (FMBN), it is only when FMBN disburses to us, that is when we give to the applicants.
Are there stipulated tenors for mortgage loans?
Yes. There is nothing that has a beginning that will not have when it will end. At Imperial Homes, the maximum tenor is 30 years, depending on your retirement age. If you are 50 years now, that means you cannot exceed 10 years because of the 60 years’ retirement age. But our Vantage product is seven years. We also have some that are 15 years. That is what happens depending on what suits the client. Home ownership is something you have to plan. You need to be building your equity with the bank. But the savings is critical. You must save religiously. If you save N500,000 monthly, that can afford you to buy a property of N25 million, which means bringing your own equity and that of the bank together, you can buy a home of N25 million. The cheapest of it is N50,000 and it has to be regular because once you miss out, it disqualifies you. It is like a pool of funds, which are loaned to people.
Does the customer earn interest during the period of savings?
Yes. Interest is paid. We also need to determine what is 33.3 per cent of your income on a monthly basis, and that is what you will start saving. So, we plan it with you. Affordabi-lity is key, and if the customer defaults, it is also going to affect the bank. If everybody pays and when due, it will enable the bank to create more loans.
What policy shift do you want to see in the mortgage industry?
There are quite a number of them. If you look at what the mortgage banks are doing, for instance, we have not gotten to single digit mortgage. We have not gotten to that point in Nigeria. For us, the most important thing is for the mortgage lenders to have access to long and cheap tenored funds. And how is that possible? Looking at pension funds, these are the type of funds that should be channeled into solving the housing gaps that we have. So, if they channel those kinds of funds to primary mortgage banks, I am sure we can create products that can be at single digit interest rate because these are long-tenored funds, and you are matching it with long-tenored loans. Unlike when you are using funds from mortgage banks that come from savings, and you cannot stop depositors from coming to take their funds.
We need access to cheap funds, and we want the government to see what they can do to let the mortgage banks have such access. That will enable the mortgage banks to even do more.
Are there other challenges facing the industry?
The next thing is foreclosure law. It has been a serious thing for us in the mortgage industry. Foreclosure law is when a customer takes loan, and has defaulted. The security that we have taken for the loan is the property we have given you money to buy. So, that is the bank’s security. And because you are not paying the bank, and I need to recover the loans, what I need to do is to foreclose on that property, put it on the market for sell, and when I sell, if there is any change left, I can then give you the balance. But because of the judicial system that we have, it is not friendly when it comes to lenders. Even when you have done what you are supposed to do, and is demanded of you, to enforce your right, it is difficult. We have ran to the Federal Government to ensure that when any borrower is owing a bank, you have it at the back of your mind, that see I need to pay my loan back because if the money is not paid back, other people will not be able to access the funds. We also want the government to create policies that will backup our business. Also, in the perspective of borrower, what the borrower wants is affordable mortgage. So, it is paramount that Federal Government should give us policies that support mortgage banking. We are also trying to educate Nigerians on mortgage.
What do you think about the mindset that borrowing to build one’s house may not be right?
I think it is just to change the mindset of people. If you do not know what you can gain from a particular thing, you might not see why you should go into it. By the time you weigh the options, you will see that instead of struggling to build your own home for the past how many years, it is possible with easy access to mortgage loans. You can look and say that you have been a tenant for many years, and if you put together those rents, in owning your own home, is it not better for you? We need to create that awareness and educate people on the benefits of getting a mortgage. In the Western World, credit facilities are open to everybody once you start working. But we do not have that type of opportunity here in Nigeria. I would want to see a process, whereby once you are graduating from Nigerian school, you have a good paying job, there should be a bank waiting to help you buy a home of your choice.
How would you describe the mortgage industry in Nigeria?
The industry in Nigeria is very vibrant. We are trying to create more awareness. We are waiting to see how the Federal Mortgage Bank of Nigeria can make its processes simpler. I think it is also trying to make things faster. The way we are being pushed to get things done in the mortgage industry, I think the sky is the beginning for us. It is more vibrant than what it used to be.
It looks like the industry is dominated by men?
We, as the women, it takes a lot of hard work, commitment to balance work with family. We have few ladies that are also in the industry. There is no gender discrimination in the industry. The same work a man is doing, I also need to do to enable me get to the top of my career. I think it is equal platform for both men and women. It is just women need to work harder and attain the leadership position in the industry.
I know it is a busy industry, so how do you balance home with the work?
Honestly, a lot of people ask me that question. And I think it is your passion, the level of passion for your job. When you have an understanding spouse that wants you to also succeed in your career that does not mean you should neglect home. When you have a good backup as your spouse, someone that is supporting you, so that even if you have not done something at home, he should be able to help you bridge that gap. I have been able to balance the two to the glory of God.
Why is it that only five per cent of the 13 million housing units in Nigeria are financed with mortgage funds?
The truth is that a lot of people are not even aware of opportunities in the mortgage industry. And because of this native intelligence, many people don’t want other people to know they are owing. So, a lot of times, people do not want to borrow to own a home. I do not know any bank that is interested, especially in Imperial Homes, in selling anybody’s property. That is why we take our time to plan it with the customer. Instead of some people to buy a property they can afford, they will go for the one they cannot afford. They want to buy a home of N100 million, and the salary cannot support anyone to be building his/her castle in the air. We want you to be realistic.
Can you tell us more about the National Housing Fund?
The National Housing Fund’s contribution, is the contribution that you pay. There is 2.5 per cent of your basic salary that you must be remitting on monthly basis. It qualifies you to apply for loan with the FMBN. You must be remitting that. What is required is minimum of six months. Let’s say, I got a job today, and I start paying the 2.5 per cent from my basic salary. In six months, I am qualified to apply for a loan from FMBN.
Many people are always interested in the pension fund, that is not forth coming most times. The FMBN is working together with the Nigeria Mortgage Refinance Company Plc (NMRC), working together to create products out of the pension funds. For the Nigerian Mortgage Refinancing, they also want to bridge the mortgage deficit gap. We know that mortgage banks do not have that access to liquidity to create many mortgages. They also come to our aid, saying that once the loan is given, the loans can be refinanced, provided they are quality loans.
In refinancing, the NMRC packages the loans together, and profile the loans to see if they are performing. If I have given loan of say, N300 million to 30 different customers, they take those loans and pay me back the outstanding for me to create more loans. But there would have to be a record of the loans performance, for they can take such loans. Also, the loan must have been running with the mortgage bank for six months, it is called season period, during which they will check the performance of the loan.