Stakeholder Laments CBN’s Removal Of Mortgage Interest Rate Cap

A player in the real estate industry, Idaibi Fiberesima, has expressed worry over the impact the removal of mortgage interest rate cap by the Central Bank of Nigeria(CBN) would have on housing delivery in the country.
Fiberesima, who is a member of the Nigeria Institute of Estate Surveyors and Valuers, in a chat with The Tide, Monday in Port Harcourt, noted that the move would spell doom for the industry.
He stated that the CBN’s recent removal of the interest rate cap for Primary Mortgage Institution (PMI),would worsen the housing delivery problems rather than improve it.
He said the move could further increase interest rates charged by mortgage banks, which he explained was between 22 and 26 percent before the Nigeria Mortgage Refinance Company (NMRC) started the refinancing of the Mortgage banks, noting however, that the interest rates came down to 17.5 percent for commercial mortgage institutions after the refinancing.
Fiberesima explained that the new provision which was issued in 2017 and became effective, September 9, 2019, indicates that interest rates and lending fees are now negotiable, which leaves the homeownership seeker at the mercy of PMIs depending on his negotiating power.
He added that the implication of the new policy is that interest rates would be determined by the risk profile of intending clients, saying, “high risk profile projects would attract high rates, while lower risk profile projects would attract lower rates or no deal at all’’.
The estate surveyor and valuer lamented that the mortgage system in Nigeria has not reduced to the housing deficit in the country, pointing out that the interest rate would be market driven and not sensitive to the housing challenge facing the average Nigerian worker.
He emphasised that the mortgage policy in the country did not encourage citizens to own their own homes, and pointed out that an interest rate of over 20 per cent and payment tenure of five years cannot be referred to as mortgage.

Tonye Nria-Dappa