Expert Says N500k Monthly Salary Not Enough As FG Announces New Scheme To Buy a House
- Expert has revealed that Nigerians earning below N500,000 monthly cannot access mortgages in Nigeria
- The reasons is due to high interest rates which push repayments beyond affordability thresholds
- The federal government has introduced a new mortgage scheme aimed at helping workers become landlords
Legit.ng journalist Dave Ibemere has over a decade of experience in business journalism, with in-depth knowledge of the Nigerian economy, stocks, and general market trends.
Nigerians earning below N500,000 ($333) a month are effectively locked out of the mortgage market due to high interest rates and affordability constraints, a top industry expert has said.
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Adedeji Ajadi, chief executive officer of the Mortgage Banking Association of Nigeria (MBAN), said home ownership was “largely unrealistic” for the majority of workers.
BusinessDay report that he noted that mortgage repayments on even modest homes exceed 40% of monthly income well above global affordability benchmarks.
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He added:
“Affordability is a major constraint; high interest rates and short tenures make mortgages unaffordable for the average Nigerian."
Interest rates currently range between 18% and 27% despite a recent cut by the Monetary Policy Committee (MPC).
Challenges of owning a house in Nigeria
Ajadi said many low- and middle-income earners prefer self-construction or informal housing because statutory repayment levels of 33% of income still leave borrowers struggling with other household needs.
He added that low access to formal financial systems, difficulties with land titling, foreclosure bottlenecks, and a lack of trust in the mortgage system were also limiting growth.
To boost affordability, Ajadi urged innovative interventions such as subsidised interest rates, credit guarantees, rent-to-own schemes, and shared equity models.
Source: Getty Images
FG scheme to buy a house
Meanwhile, the Ministry of Finance Incorporated Real Estate Investment Fund (MREIF) has announced a reduction in the necessary down payment for its mortgage program from 20% to 10% to alleviate Nigeria's housing shortage and increase accessibility to homeownership.
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This action significantly reduces the financial barriers for prospective homeowners and coincides with a previously announced interest rate reduction to 9.75%. MREIF's long-term mortgage products, with repayment terms of up to 20 years, are now subject to these updated terms.
On his official LinkedIn account, Armstrong Takang, the Chief Executive Officer of the Ministry of Finance Incorporated (MOFI), confirmed the news, calling it a game-changer for millions of Nigerians hoping to purchase their first homes.
Takang stated:
“I am excited to share that the Equity Contribution for home seekers under the MOFI Real Estate Investment Fund (MREIF) has now been reduced to 10%, from the initial 20%, for all applicants. This follows our recent reduction of the interest rate from 12% to 9.75%."
Tenants may soon pay less as Lagos plans adjustments
Earlier, Legit.ng reported that a member of the Lagos State House of Assembly, Mr. Stephen Ogundipe, has said that the proposed Tenancy Bill currently before the House is aimed at safeguarding tenants from undue exploitation by estate agents.
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The lawmaker explained that the bill was drafted in response to public outcry over excessive charges imposed by agents, particularly the high agency fees on rents.
The government has also introduced official channels through which residents can report property owners and agents who violate housing regulations.
Source: Legit.ng
