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FG eyes 12% mortgage interest rate on low-cost homes

Ahmed Dangiwa, Minister of Housing and Urban Development, recently announced that the government is working towards a 12% mortgage interest rate to make homeownership more accessible to Nigerians.

Speaking at the Saudi Arabia Real Estate Forum, Dangiwa highlighted the significant opportunities in Nigeria's real estate sector, particularly through the government's Renewed Hope Cities and Estates Programme.

"Nigerians need homes now more than ever, and you can partner with the Nigerian government to deliver these houses at scale," Dangiwa reported.

The Nigerian government has acknowledged the urgent need to address the country's massive housing deficit, which is currently estimated at 28 million units.

"The real estate sector contributed around 5.2 per cent to Nigeria's GDP in 2024, and the market is expected to reach N2.25 trn by the end of 2025," Dangiwa explained.

Despite the sector's growth, challenges remain, particularly in terms of housing affordability.

High mortgage interest rates, which have historically ranged between 28 and 30 percent, have made homeownership out of reach for many Nigerians.

In response to this, Dangiwa said, "the government is working to introduce a Real Estate Investment Fund that would offer mortgage interest rates as low as 12 per cent, significantly improving affordability for middle- and low-income Nigerians."

"To achieve this, we are expanding the Federal Mortgage Bank of Nigeria and recapitalising it with N500 bn to provide more accessible single-digit mortgage products," Dangiwa declared.

He also emphasised the implementation of rent-to-own programs, which would allow applicants to pay rent in monthly installments rather than large upfront payments.

The minister also addressed concerns about balancing profitability for developers and affordability for buyers.

"We are using incentives such as bankable off-take guarantees, facilitated land access, and low-interest financing to encourage investment in affordable housing," as he explained.

In addition to affordability, Dangiwa emphasised the significance of sustainability in the housing industry.

He revealed that the ministry is collaborating with international partners, including the International Finance Corporation, to integrate green building practices into Nigeria's housing development.

The government is also working to establish building materials manufacturing hubs throughout Nigeria's six geopolitical zones in order to reduce reliance on imported materials, lower costs, and create jobs.

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