The Federal Government on Thursday okayed the establishment of a Ministry of Finance Incorporated Real Estate Investment Fund, with a start-off of N250 billion that will provide low cost, long term mortgages to Nigerians desirous of acquiring houses.
The approval was given by the Federal Executive Council (FEC) at its meeting chaired by President Bola Tinubu in Abuja.
Minister of Finance, Wale Edun, while briefing State House correspondents, said the fund is the basis for the revival and the the return of long term mortgage financing to the Nigerian economy.
He stressed that it would help to complete or help to fill part of the gaping 22 million units housing deficit, create jobs, stimulate economic growth, and pave the way for other investors, private sector, to also participate more in the housing construction industry with huge benefits to the whole economy.
Edun stressed that “long term investors have the opportunity to earn market rates of interest on investment and market returns, market price-based rates of return on investment”.
He added: “When I say low cost, we are talking about low double digit, maybe 11, 12% maybe even less, depending on market conditions. And that will be achieved by attracting long term savers, life insurance companies, maybe pension funds, within the limits of what is allowed, and other savers.
“Their money will be blended with low cost funding that the government has access to, at 1% funds that are available for 40 years. And by blending the two, depending on what percentage of 1% money you you merge with 1% with market based interest rates, you will end up with affordable pricing on the mortgages.
“The tenor can be the likes of 20 years and more. It relieves Nigerians, who normally will be faced with almost 30% interest rates, and they will be faced with 10 hours of 2,3,4, years within which they have to pay back. Now they will have rates closer to 10% now they will have tenures over 20 hours, and that will be a tremendous relief.”
