The latest information from Bloomberg and other sources have indicated that Nigeria’s mortgage lending rate appears to be the highest in the world. While some countries or banks are paying the customers to come for mortgages, Nigeria’s mortgage rate is heading for the sky.
One of the many problems bedeviling Nigeria is that of the housing shortage. In 2017, the Bureau of Public Service Reform (BPSR) warned that Nigeria was facing a housing deficit crisis as it was estimated that 108 million Nigerians were technically homeless.
According to the Bureau, the 100,000-house built annually has been inadequate to alleviate the housing crisis.
In the same year, the Nigerian Bureau of Statistics estimated that the nation’s housing shortage was about 18 million. Since 2017 when the above statistic came to light, nothing seems to have changed.
There are many factors that are responsible for the housing deficit like the high cost of building materials, high level of poverty, high rate of urbanization, increase in population growth rate, high cost of land and the red tapes involved in land acquisition, among others.
Those factors notwithstanding, it appears that the single most troubling factor that may be rendering the housing crisis intractable is that of inefficient housing finance or the lack thereof.
According to Buylandinlagos.com, the mortgage rate is between 20-27% in Nigeria, if you approach regular banks, but can be as low as 6%, to 9% when borrowing from the National Housing Fund.
With mortgage rates so high in Nigeria, is it any wonder why there is housing deficit in Nigeria? The mortgage rate is about the major consideration when deciding on taking a housing loan.
Research and analysis have it that in almost all countries, housing activities have been spurred whenever mortgage rates are deliberately reduced or reduced as a result of prevailing economic circumstances.
With Nigeria’s mortgage lending rate as high as 20%, there is no doubt that such high rate will act as a disincentive to housing activities and as long as the rates remain that high, the problem of housing deficit may not be solved any time soon.