At least 55 per cent of the mortgage industry’s N94bn loans are classified as non-performing, according to the Nigeria Deposit Insurance Corporation.
The President, Mortgage Banking Association of Nigeria, Adeniyi Akinlusi, was quoted as saying, “They are just struggling to survive; a lot of them aren’t making money.”
While the association said it was not aware of any mortgage lenders on the verge of collapsing, increased pressure on the nation’s 36 home-loan providers presents another challenge to the Federal Government as the country reels under recession.
Rising costs for everything from building materials to school fees have meant the industry has been stagnant since June, according to Akinlusi.
That compares with a ratio of 10 per cent for the N18.5tn of loans granted by commercial banks and 45 per cent for microfinance banks, which have N195bn of outstanding loans.
“The real estate market mirrors the larger economy,” the Chief Executive Officer of Lagos-based real estate broker, Fine and Country West Africa, Udo Okonjo, said.
“Over the last year-and-a-half, the recession affected key sectors such as oil and gas, financial and manufacturing. There were a lot of layoffs.”
The country’s official unemployment rate jumped to the highest level in at least seven years in the third quarter of last year.
While inflation in February slowed from a record a month earlier, at 17.8 per cent, it is still almost double the CBN’s target.
Total assets in the mortgage industry surged to more than N386bn at the end of June, compared with N102bn a year earlier.
Regulators require mortgage lenders to have at least half their total assets in home loans.
Biggest mortgage banks include Union Homes Savings and Loans Plc, FBN Mortgages Limited, and Abbey Mortgage Bank Plc, which in October reported that net income in the third quarter plunged 37 per cent as non-performing loans jumped.
There are efforts to return the industry to growth as the Federal Government pledges to boost housing through the creation of a fund of as much as N1tn, which will offer up to 20-year loans to developers at interest rates of 9.9 per cent.
The Federal Mortgage Bank is also giving mortgage providers loans of up to 20 years, which will relieve operators of the burden of having to seek long-term funding, according to Akinlusi.
According to him, the regulator is expected to draft rules this year that will enable mortgage companies to provide loans to workers in the informal sector, including farmers, who do not earn enough to make an initial down-payment for the debt.