Nigeria’s economy is growing at a fast pace with an average Real GDP growth of 6 percent for the last decade. Nigeria is the most populous country in Sub-Saharan Africa with 174 million people. It is also one of the most urbanized countries in the Sub-Saharan African region, with approximately 50 percent of its population living in urban centers. In 2008, 52 percent of housing units in urban areas were owner-occupied and 40 percent were private rental units¹.

The Nigerian mortgage industry has 104 firms originating mortgages, 84 Primary Mortgage Institutions (PMIs)  and 20 commercial banks. Yet, the total mortgage debt outstanding was only 0.5 percent of GDP in 2011². Typical Loan to Value (LTV) on first mortgages is about 75%. And, the borrower is not expected to have a debt service ratio above 33.3% of individual income. Credit information is available with the help of three credit bureaus – CreditRegistry, XDS Credit Bureau and CRC³.

Nigeria’s housing finance system has been dominated by the Federal Mortgage Bank of Nigeria(FMBN), which is  a second-tier institution that receives its funds from the  National Housing Trust Fund (NHTF) to on-lend to PMIs.  NHTF is a provident fund established in 1992 that, in theory, receives 2.5 percent of the formal sector wage bill of workers who earn more than the minimum wage, although actual contributions are considerably lower. Contributors earn 2 percent interest on their savings. FMBN manages the funds and allocates them to PMIs to make below market rate long-term fixed rate loans.  

. After contributing to the fund for six months, workers are eligible for a fixed 6 percent, 30-year mortgage loan of up to USD 43,000, requiring a 10 percent down payment. PMIs receive their funding from the NHTF at a rate of 4 percent. With dwindling resources this system has failed to provide the needed growth of the mortgage industry and is currently being reformed. In addition, it hindered the growth of a competitive private mortgage market.

A recent development is the establishment of National Mortgage Re-Finance Company (NMRC) aimed at sourcing  long-term funding from the capital markets to refinance the mortgage portfolios of qualifying mortgage lenders. This liquidity facility started by the Nigerian Federal Government was granted USD300 million financing support from The World Bank. It has still to be made operational (as of July 2014).

One of the main constraints in expanding the mortgage market is the difficulty to register and transfer property rights, which requires the approval of the governor of the state. Some states have recently made changes to this system. It takes an average of 86 days to transfer title.