The Federal Government has announced a N1 trillion real estate fund through the Ministry of Finance Incorporation to facilitate homeownership with a 12 percent interest rate, aiming to make housing more accessible.

This initiative is seen as a step in the right direction, experts and stakeholders are calling for an even lower interest rate, preferably in the single-digit range, to truly make homeownership a reality for low-income earners.

Festus Adedayo, Executive Director of the Housing Development Advocacy Network (HDAN), acknowledged that while a single-digit interest rate would have been ideal, the current economic realities of Nigeria make it difficult.

However, he emphasized that starting with 12 percent is manageable given the economic challenges the country is facing. He also stressed the need for locally produced building materials to reduce construction costs and called on the Central Bank of Nigeria (CBN) to take a more active role in the housing and mortgage sector. In his view, the government must also support the Family Homes Funds (FHF) and the Federal Mortgage Bank of Nigeria (FMBN) to promote social housing and cater to those who may not be able to afford even the 12 percent interest rate.

Adewunmi Okupe, Managing Director of Ace Hi-Teck Construction Co., pointed out that a salary earner making N360,000 per month would struggle to afford a mortgage at 12 percent interest. He advocated for an interest rate between 4 to 6 percent, stating that affordable housing must come with affordable interest rates. Okupe calculated that taking a mortgage on a N12 million home at 12 percent interest would mean paying N1.44 million annually in interest alone, which translates to N120,000 per month. Given this, he argued that such a loan structure would be unfeasible for the average Nigerian worker.

Some experts believe that the government’s current 12 percent interest rate will result in unproductive mortgages that won’t truly address the housing crisis. One expert, identified simply as “Evocati,” questioned how the government arrived at this rate, arguing that with the current cost of homes, the mortgage system, as structured, does not benefit the target population. He insisted that a combination of single-digit interest rates and some form of housing subsidy would be the only way to make homes accessible to lower-income earners.

Dr. Niyi Ade, another industry expert, agreed that while the 12 percent rate increases affordability to some extent, it still excludes those at the lowest economic level. He argued that intervention should go beyond interest rates and extend to building materials and cost-effective construction methods.

However, not all experts share the same sentiment. Some, like Banjo, believe that 12 percent is still a significant improvement compared to the over 30 percent interest rates currently offered in the market. He argued that while single-digit interest rates would be preferable, starting with 12 percent is a step in the right direction, especially given the Monetary Policy Rate (MPR) of 27.5 percent.

Lagos-based estate surveyor and valuer, Femi Oyedele, dismissed the idea of single-digit interest rates in Nigeria, stating that economic conditions and cultural factors do not support such rates. He suggested that a single-digit rate is unlikely in the next ten years. He also clarified that the Ministry of Finance Incorporation (MOFI) is not a mortgage bank but a commercial entity designed to facilitate financial transactions.

He pointed to a similar N250 billion initiative announced in late 2024, which was meant to stimulate economic growth through the housing sector but was not structured as an affordable mortgage fund. According to Oyedele, the N1 trillion fund at 12 percent interest is more of a low-interest commercial loan than a mortgage loan, as true mortgage financing requires a structured contribution from prospective homeowners rather than direct government intervention.

Another expert, Emmanuel, believes that achieving a single-digit interest rate is possible in the medium term, provided the Naira’s devaluation is controlled and economic policies become more disciplined and transparent. He suggested that if MOFI is managed efficiently, the N250 billion initiative could be leveraged to generate over N1 trillion in funding for inclusive housing development. This, he said, would not only boost affordable housing but also attract impact investment and additional mortgage products that the sector has long struggled to secure.

While the N1 trillion real estate fund represents progress, the debate on affordability continues. Many experts believe that without a lower interest rate and additional housing subsidies, the initiative will not fully address Nigeria’s housing deficit. Others argue that given the country’s current economic situation, 12 percent is a reasonable starting point. The coming months will reveal whether this policy can truly bridge the housing gap or if further reforms will be necessary to ensure that homeownership is within reach for more Nigerians.