“NMRC is not as straightforward as people think” – Lanre Afolabi

In an interview with Elsie Godwin of Nigeria Real Estate Hub, the acting MD of New prudential Mortgage Bank, Mr. Lanre Afolabi who has garnered over 15years experience that span through Financial service sector: ranging from mortgage banking through investment/commercial banking and Real Estate, said NMRC is not as straight forward as people would think.

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How would you describe the progress of Mortgage Banking in Nigeria?

There has been some progress although it is still not where we would have wanted it to be. The interest rate is still not friendly and the tenure offered is also not competitive. However, with the recent recapitalization of the mortgage banks and the establishment of the NMRC, though a starting point, will make us witness major progress in the mortgage banking sub-sector.

There’s been a report on the FG’s plan to introduce insurance as a condition for mortgage loans, what is your take on this plan?

Insurance policy (Fire & Special peril, Life) has always been a key requisite towards obtaining a mortgage loan in case of an unforeseen occurrence and that’s the essence of the premium a subscriber would have been paying over the years.

What’s the update on NMRC? Has your bank been able to access funds?

NMRC is a refinancing corporation as the name implies. It’s like your ‘Fannie Mae’. However, for now, it is not as straight forward because there are some other issues involved. For your mortgage loans to be compliant, there are certain underwriting criteria that has to be met and the loan must have performed for a minimum of six months. Now, that takes us to the issue of funding the mortgages before it becomes mature for NMRC to refinance. So, you see, you have to have the capability to raise funds prior to the refinancing. The good news however, is that the mortgage banks in partnership with Dunn Loren Merrifield are working on an SPV that will be saddled with that responsibility to enable us meet our obligation to Nigerians.

Mortgage sector in the country faces a lot of challenges, especially primary mortgage segment. How is New Prudential Mortgage taking these challenges?

Well, it’s a challenge that is not limited to NPMB. You have the issue of funding, which we have tried to talk about as regards recapitalization and the introduction of NMRC. However, we have been able to keep our head above water through the goodwill we have enjoyed from our customers. Some of them have given us long term funds, which tries to reduce/address the issue of matching your deposits with your loans. Also, we have been innovative in the type of strategic alliances we have had over time. So, all that has really been helpful. You also have the issue of titling, which makes funding of mortgages to be a challenge, sometimes. You also have challenges in the area of required skill set. For us, we have been lucky to assemble perhaps the best hands in the industry.

In 5 years, where do you see Mortgage banks and Real Estate in Nigeria?

Mortgages is basically a creation of housing development. If there are no houses, there won’t be any mortgages. We all know about the shortfall in the Nigerian housing market in terms of the housing delivery. For us, we feel the gap and market is in the low to middle income earners. These are largely potential first time home owners that are not likely to default. So, we have been  having some strategic relationship with some developers towards the provision of affordable houses. Recently, we collaborated with REMAX REALTORS in developing a gated estate comprising of 500 units of 3 bedroom flats at Egbeda. With N10million, you are a home owner! So, in 5 years, we see NPMB being in the forefront, when it comes to the provisioning of affordable homes.