At Karsana Estate in Abuja, one of the Federal Government’s flagship mortgage-backed housing schemes, the empty rows of completed houses tell a familiar story. Despite efforts to revitalise Nigeria’s mortgage market, most property developers still avoid mortgage-linked housing projects. Instead, they prefer cash-based or off-plan transactions that promise quicker returns and fewer complications.

This persistent reluctance has deepened the mismatch between supply and demand—leaving an oversupply of luxury homes for cash buyers and a chronic shortage of affordable housing for Nigerians who depend on long-term financing.

In developed economies, mortgage financing underpins homeownership. Developers construct homes, banks provide mortgage loans to buyers, and the developers are promptly paid. But in Nigeria, this cycle breaks down.

Private developers rarely engage with mortgage institutions. Most rely on short-term commercial loans with interest rates of 20–30 per cent—making it nearly impossible to tie up capital in mortgages that span 10 to 25 years.

According to the Real Estate Developers Association of Nigeria (REDAN), the country’s mortgage-to-GDP ratio is less than one per cent, one of the lowest in Africa. By contrast, South Africa’s mortgage sector contributes about 20 per cent to its GDP.

A senior REDAN member who requested anonymity explained the challenge succinctly: “Developers can’t afford to wait a decade for repayment. Inflation and high interest rates make that business model unsustainable.”

For potential homeowners, mortgage terms are just as daunting. Lending rates range from 18 to 25 per cent annually—far beyond what most middle-income earners can afford. Even the National Housing Fund’s six per cent loan scheme has limited reach and suffers from lengthy approval processes.

The shorter tenures common in Nigeria—typically 15 to 25 years—further inflate monthly repayments, while developers complain that banks often delay disbursements or alter terms midway through a project. This lack of reliability has eroded trust on both sides, creating a cycle where developers avoid mortgage-backed buyers, and banks, in turn, hesitate to fund developers.

The Nigerian Mortgage Refinance Company (NMRC), established in 2014 to inject liquidity into the market, has yet to achieve the desired impact. Limited capital, few mortgage originations, and the dominance of informal financing have restricted its reach.

Without a functional secondary mortgage market, lenders struggle to refinance existing loans or attract new investors. As a result, developers rely on private equity and self-financing—models that naturally favour high-end developments and cash-ready clients, including diaspora investors.

Beyond financing issues, land administration remains a major obstacle. Securing valid titles and approvals is slow, expensive, and bureaucratic. Since many urban lands are held under customary tenure without proper registration, they cannot easily be used for mortgage-backed projects.

This pushes developers to operate within informal frameworks—selling directly to buyers who can pay upfront or through short-term instalments rather than long-term mortgage plans.

Nigeria’s real estate sector, valued at over ₦41 trillion in 2024, now ranks as the third-largest contributor to GDP after trade and crop production. Yet, mortgage penetration remains abysmally low.

Data from the Federal Mortgage Bank of Nigeria (FMBN) show that between January and July 2025, ₦60.46 billion in mortgage loans were approved—barely making a dent in the estimated 22 million-unit housing deficit.

Only about 32 primary mortgage banks operate nationwide, and most cater to niche or high-income clients rather than the mass market.

Most Nigerians lack the steady income or credit profile needed to qualify for mortgage financing. With a large proportion of the workforce engaged in informal employment, documentation such as payslips and tax records is often unavailable.

Rising construction costs further compound the problem, pushing housing prices beyond the reach of average earners.

Olajide Dosunmu, Chief Executive Officer of Noble Ground, described the situation as “a long-standing structural challenge.” He, however, welcomed the Ministry of Finance Incorporated Real Estate Investment Fund (MREIF)—a public-private initiative offering mortgages at 9.75 per cent for up to 20 years—as “a genuine step in the right direction.”

“Processing now takes about two months,” he said. “You only need to pay 10 per cent upfront and show that your income is at least three times your repayment amount. The challenge, however, is that many people still can’t afford even that.”

Dosunmu urged the government to promote cost-effective construction materials such as mud and hydrofoam blocks to bring down overall housing costs.

Realty Point Limited’s Managing Director, Gbadebo Adejana, argued that mortgage-linked housing must be integrated from the earliest design stage. “If a project isn’t structured around mortgage financing from the beginning, it’s difficult to make it work later,” he said.

Former chairman of the Nigerian Institution of Estate Surveyors and Valuers (NIESV), Dotun Bamigbola, shared a similar view. “Most developers prefer cash transactions because they offer faster returns,” he noted. “Off-plan sales have become the substitute for mortgages, allowing buyers to pay over a shorter period during construction.”

Experts agree that deepening mortgage financing is critical to expanding homeownership in Nigeria. That will require coherent policy reforms across federal and state levels, recapitalising mortgage banks, improving credit scoring systems, and streamlining land titling processes.

Until these structural challenges are addressed, developers will continue to favour cash-based models—leaving millions of Nigerians locked out of affordable, mortgage-backed homeownership.

The post Developers Shun Mortgage-Driven Projects as Nigeria’s Housing Deficit Widens appeared first on Housing TV Africa.

Despite its potential to transform the mortgage landscape, only a handful of states Lagos, Ekiti, Nasarawa, and Kaduna have enacted their versions of the law. This reluctance by most state governments has discouraged property developers and mortgage investors from engaging in these regions, stalling progress in addressing Nigeria’s growing housing deficit.

The MMFL was designed to establish state-level mortgage boards that simplify property registration, streamline title perfection processes, and enable non-judicial foreclosure mechanisms. The law aims to create a conducive environment for mortgage origination, allowing citizens to access affordable housing while generating jobs and boosting internally generated revenue. However, approximately 32 states have yet to domesticate the law, leaving Nigeria’s housing sector fragmented and underfunded. In states like Edo, Akwa Ibom, and Cross River, the law remains in various stages of legislative limbo, while Ogun State is merely awaiting the governor’s sign-off.

In contrast, states that have embraced the MMFL are seeing tangible benefits. Lagos, for example, has implemented a rent-to-own scheme backed by its mortgage board, enabling over 20,000 residents to purchase homes with a low-interest rate of 6% and a repayment period of up to 10 years. Similarly, Nasarawa State’s passage of the law has made real estate investments more secure and bankable, attracting investors and improving homeownership rates.

The persistent housing deficit in Nigeria remains staggering. A World Bank survey revealed that 700,000 housing units are needed annually to meet demand, yet only about 100,000 units are produced yearly. This shortfall has resulted in an accumulated deficit, further exacerbated by a lack of mortgage financing. According to a 2020 Central Bank of Nigeria (CBN) report, the country requires between N15 trillion and N20 trillion in mortgage financing to bridge the housing gap, but only 5% of Nigeria’s 13.7 million housing units are currently financed through mortgages.

The mortgage sector’s challenges are compounded by an underwhelming contribution to the nation’s GDP—just 0.5%. This figure pales in comparison to countries like Namibia, where mortgage penetration accounts for 18.9% of GDP, and South Africa at 16.2%. In Nigeria, reliance on personal savings rather than mortgages continues to dominate the housing market. This is largely due to the absence of an effective foreclosure mechanism, which deters lenders from offering mortgages. Obtaining a foreclosure order through the courts can take years, discouraging financial institutions from taking on the risk of non-repayment.

The MMFL introduces several innovative features to address these challenges, including the establishment of mortgage registries, streamlined consent requirements, and alternative dispute resolution mechanisms. Notably, it allows for non-judicial foreclosure, enabling lenders to reclaim properties without prolonged court proceedings. For instance, Kaduna State’s 2017 adoption of the MMFL has made it easier for lenders to recover defaulted loans, creating a more favorable environment for mortgage investments.

However, the adoption of the MMFL has faced resistance from state governments, primarily due to the provisions of the Land Use Act, which vests land ownership in state governors. Many governors are hesitant to be bound by foreclosure laws, fearing a loss of control over land matters. This reluctance has stalled efforts to create a unified mortgage framework across the country.

Experts argue that widespread adoption of the MMFL is crucial for unlocking Nigeria’s housing potential. Former President of the Mortgage Banking Association of Nigeria (MBAN), Adeniyi Akinlusi, emphasized that effective foreclosure laws would enable more citizens to own homes, thereby addressing economic disempowerment and attracting investment into the housing sector. Similarly, the Chief Executive Officer of the Nigerian Mortgage Refinance Company (NMRC), Kehinde Ogundimu, noted that the MMFL provides a sound legal framework for mortgage transactions, making real estate investments more secure and expanding revenue streams for state governments.

Despite these benefits, public perception remains a challenge. Many Nigerians view foreclosure as a draconian measure, fueling fears of losing their homes. To address this, the term “foreclosure” is being rebranded as “Mortgage Loan Administration” to make the concept less intimidating. Advocates stress that the law is not about forcefully taking over properties but about creating opportunities for more Nigerians to access homeownership through a sustainable mortgage system.

The stakes are high. Without widespread adoption of the MMFL, Nigeria’s housing deficit will continue to grow, leaving millions without access to affordable homes. States that delay passing the law risk missing out on the economic and social benefits of a thriving housing sector. For Nigeria to close its housing gap and foster economic growth, state governments must prioritize the domestication of the MMFL, creating an environment where affordable homeownership becomes a reality for all.

The post Unlocking Homeownership: Why Nigeria’s Housing Crisis Persists Without Foreclosure Laws appeared first on Housing TV Africa.

This is the case in Nigeria where the population is growing while the economy struggles. This is moreso in the last seven years of the President Muhammadu Buhari administration. Little wonder therefore that, in contemporary times, Nigeria is dubbed the capital of global poverty.

The situation in the country has been worsened by growing urbanisation that has necessitated a warning from the United Nations Agency for Settlement (UN-Habitat). This UN body has contended that, unless something is done urgently, about 60 percent of the population will live in the cities by 2050.

Meanwhile, a combination of growing population and fast-paced urbanisation means enormous pressures on urban housing. This is also because the housing stock in the country is just a little above 13 million units and home ownership is just about 25 percent of the country’s estimated 200 million population.

Many Nigerians, particularly those classified as vulnerable and the extreme poor, need housing. But the state of the economy neither supports nor empowers them to have one…

It is clear from the above that many Nigerians are homeless and therefore need somewhere to live. It does not matter much that the government, in what is clearly a flight from reality, argues vigorously that there is no housing deficit in the country. We believe that there is.

Many Nigerians, particularly those classified as vulnerable and the extreme poor, need housing. But the state of the economy neither supports nor empowers them to have one; hence the imperative of social housing development as a solution to their problem.

It is pertinent for us to remind the government that housing is a right. Many local and international conventions guarantee the right of people to social protection that will help to eliminate the worst manifestations of poverty. Even the Nigerian Constitution expressly provides for the social protection of all.

Therefore, it is our view that, without housing, nobody can fully enjoy his/her right to the free development of his/her personality. Adequate public infrastructure provision is a veritable tool of ensuring a sense of belonging of the people and of reducing poverty and crime.

Besides providing shelter and protection, housing infrastructure development can be used to develop an economy. Housing construction generates high level of employment, involves great number of participants, does not accommodate class discrimination and is gender-friendly.

We recognise that attempts have been made by the government to address the housing needs of low-income Nigerians through the establishment of mortgage institutions that offer low interest rates on housing finance. But over time, it has turned out that what the government considers its best is not good enough.

For instance, it is about three decades of the Federal Mortgage Bank of Nigeria (FMBN) and the National Housing Fund (NHF) working collaboratively with the primary mortgage banks (PMBs) to ease access to housing through low interest rate mortgages.

We are bold to say that the activities of these institutions have not changed anything for an average home seeker. Instead, it has become a lot clearer that mortgage loans to buy or build remain a mirage—neither accessible nor affordable even at the 6 percent interest rate that the NHF offers.

When the Nigerian Mortgage Refinance Company (NMRC) and the Family Homes Funds (FHF) came on board, many Nigerians thought that they would change the country’s home-ownership story.

NMRC came as a secondary mortgage institution that is private sector-led but with the public purpose of enabling the delivery of affordable housing by increasing liquidity in the mortgage system and dragging down interest rate on mortgage loans to single digit.

We recall that the company was planned to offer long-term loans at single digit interest rate that is expected to come down to 4-6 percent in the long run. Nigerians were told that, on a yearly basis, 750,000 homes would be added to the available stock, thereby reducing the deficit. That is yet to happen six years after.

On its part, FHF came as the government’s social intervention in the housing sector. With its N1.3 trillion funding, it was expected to deliver 500,000 housing units and in the process create about 1.5 million jobs, all happening within a period of five years.

To date, the funds, which started operations in 2017, has financed the development of about 11,700 homes for low-income earners across several states in Nigeria and has created about 64,000 jobs.

From the above, it is clear to us that the government cannot, through direct involvement, provide housing for Nigerians. We therefore join the call on the government to concentrate on creating the enabling environment for private developers to deliver housing for Nigerians.

Apart from incentives such as tax holidays and free land, we also urge the government to deal with issues such as urban and rural roads, high interest rates, high cost of building materials; Land Use Act, the tortuous judicial system, and high poverty level. All of the foregoing are all obstacles to home-ownership. Consequently, if and when the government is able to neutralise these obstacles, the goal of social housing would have adorned the garb of reality.

The post Social housing and a struggling economy appeared first on Housing TV Africa.