The Nigerian real estate market is a vibrant and evolving sector, significantly contributing to the nation’s economy. Within this dynamic landscape, mortgage institutions play a pivotal role, bridging the gap between prospective homeowners and their dream properties. As urbanization accelerates and the demand for affordable housing intensifies, understanding the intricacies of mortgage institutions in Nigeria becomes crucial for both potential homeowners and investors.
Mortgage institutions in Nigeria are tasked with providing financial solutions that enable individuals and businesses to purchase, build, or renovate properties. These institutions are integral to achieving the government’s vision of increasing homeownership rates and fostering economic stability through real estate development. However, navigating the mortgage landscape in Nigeria involves understanding a myriad of factors, including regulatory frameworks, interest rates, and the types of mortgage products available.
Previously we have written posts about How to Buy a Mortgaged Property in Nigeria and Mortgage Trends to Watch Out For as well.
In this blog post, we will delve into the various facets of mortgage institutions in Nigeria, shedding light on their roles, challenges, and opportunities. Whether you’re a first-time homebuyer looking to secure a mortgage or an investor seeking to understand the market better, this guide aims to provide valuable insights into the functioning and significance of mortgage institutions in the Nigerian context.
What is a Mortgage Institution?
A mortgage institution is a financial entity that specializes in providing mortgage loans to individuals and businesses for the purpose of purchasing, constructing, or refinancing residential or commercial properties. These institutions play a crucial role in the real estate and housing markets by making homeownership more accessible and supporting property development.
Types of Mortgage Institutions:
Commercial Banks: Many commercial banks offer mortgage loans as part of their broader suite of financial services.
Mortgage Banks: These are specialized financial institutions dedicated solely to mortgage lending. They may originate, fund, and service mortgage loans.
Savings and Loans Associations: Traditionally focused on accepting savings deposits and making mortgage loans, these institutions play a significant role in residential financing.
Credit Unions: Member-owned financial cooperatives that often provide mortgage loans to their members at favorable terms.
Government-Sponsored Entities (GSEs): Organizations such as Fannie Mae and Freddie Mac in the United States, which buy and guarantee mortgages from lenders to provide liquidity in the housing market.
Purpose of the Mortgage Banks
Mortgage banks serve as the backbone of the housing finance system in Nigeria, playing an essential role in the real estate sector and the broader economy. Here are the primary purposes and functions of mortgage banks in Nigeria:
1. Facilitating Homeownership
The foremost purpose of mortgage banks is to make homeownership accessible to a larger segment of the population. By providing long-term financing options, mortgage banks enable individuals and families to purchase homes without the need for full upfront payment. This democratizes access to housing and helps in increasing the homeownership rate in Nigeria.
2. Providing Affordable Financing
Mortgage banks offer various mortgage products with different interest rates and repayment terms, catering to diverse financial capacities. By providing more affordable financing options compared to traditional banks, mortgage banks help mitigate the financial barriers that prevent many Nigerians from owning homes.
3. Supporting Real Estate Development
These institutions also play a crucial role in supporting the development of residential and commercial properties. By offering construction loans and financing for real estate developers, mortgage banks contribute to the growth of housing infrastructure, addressing the housing deficit in the country.
4. Economic Growth and Stability
Mortgage banks contribute to economic growth by stimulating the real estate market, creating jobs, and fostering investments in housing projects. The growth of the housing sector has a multiplier effect on other industries, such as construction, manufacturing, and services, thereby bolstering the overall economy.
5. Promoting Financial Inclusion
By extending credit facilities to a broader segment of the population, including those in lower-income brackets, mortgage banks promote financial inclusion. This aligns with national goals of reducing poverty and enhancing economic participation among all societal segments.
Mortgage Institutions in Nigeria
FBN Mortgages
FBN Mortgages, a subsidiary of First Bank of Nigeria, is a prominent player in the Nigerian mortgage industry. As part of one of the oldest and most reputable banking institutions in the country, FBN Mortgages leverages its parent company’s extensive financial expertise and infrastructure to provide a range of mortgage products and services tailored to the needs of Nigerian homebuyers and property developers.
FBN Mortgages stands out as a leading provider of mortgage solutions in Nigeria, driven by a commitment to making homeownership a reality for more Nigerians. With its range of products, competitive terms, and customer-focused services, FBN Mortgages continues to play a pivotal role in the country’s housing finance sector.
Infinity Trust Mortgage Bank Plc
Incorporated on January 28, 2002, as Infinity Trust Savings & Loans Limited, Infinity Trust Mortgage Bank Plc (ITMB) began its operations in Abuja in 2003. For nearly two decades, ITMB has been dedicated to offering Nigerians a wide range of homeownership opportunities through efficient mortgage services.
Serving the needs of 8 out of 10 customers who visit, ITMB ensures that each client receives a mortgage product tailored to their income, facilitating their journey to homeownership. The bank has played a significant role in financing over 20 modern estates across Nigeria, showcasing its commitment to the real estate sector.
In a strategic move, ITMB transitioned to a Public Limited Liability Company on January 25, 2013, and subsequently rebranded as Infinity Trust Mortgage Bank Plc. The bank’s shares were listed on the main floor of the Nigerian Stock Exchange on December 11, 2013. By 2014, ITMB had attained the status of a National Mortgage Bank and holds equity in the Nigeria Mortgage Refinance Company (NMRC).
Today, Infinity Trust Mortgage Bank Plc stands as one of Nigeria’s leading and most capitalized Primary Mortgage Banks. The bank has significantly grown its shareholders’ funds from a negative position in 2004 to over N6 billion, and its balance sheet has expanded to over N16 billion from less than N100 million in 2004. ITMB has maintained an unbroken record of consistent profitability and dividend payments to shareholders for fourteen years, providing affordable and decent housing to over 20,000 Nigerian families.
Federal Mortgage Bank of Nigeria (FMBN)
The Federal Mortgage Bank of Nigeria (FMBN) has its roots dating back to 1956, initially known as the Nigerian Building Society (NBS). This early institution was a joint venture between the Commonwealth Development Corporation and the Federal and Eastern Governments of Nigeria.
FMBN serves as a crucial mechanism for enhancing the mobilization of long-term funds and expanding mortgage lending services across all segments of the Nigerian population. The bank plays a pivotal role in increasing the volume of lending and ensuring that mortgage services are accessible to a broad spectrum of Nigerians.
Platinum Mortgage Bank Ltd
Platinum Mortgage Bank Ltd, established in 1992, is a premier Primary Mortgage Institution in Nigeria. Registered with the Corporate Affairs Commission, the bank is authorized by the Central Bank of Nigeria (CBN) and the Federal Mortgage Bank of Nigeria (FMBN) under the CBN Decree 24 of 1991 and FMBN Decree No. 53 of 1989 to offer comprehensive mortgage banking services.
Originally named Platinum Home Investment and Mortgage Limited, and headquartered in Lagos, the bank underwent significant recapitalization to become a robust Primary Mortgage Institution. Today, Platinum Mortgage Bank Ltd is recognized for its innovative products and services, cutting-edge information technology, and expert professional management.
Abbey Mortgage Bank Plcabbey
Abbey Mortgage Bank Plc stands as Nigeria’s premier, largest, and most profitable independent Primary Mortgage Bank. Among the seven national Primary Mortgage Banks licensed by the Central Bank of Nigeria and the Federal Mortgage Bank of Nigeria (FMBN), Abbey Mortgage Bank holds a distinguished position.
As an accredited primary mortgage bank for National Housing Fund (NHF) on-lending facilities, Abbey Mortgage Bank offers a variety of mortgage and investment products, along with expert guidance and advisory services. These services cater to both corporate organizations and individuals, empowering them to access housing finance. Additionally, the bank finances and facilitates mortgage and real estate-related services, effectively responding to the diverse needs of its clients.
List of CBN-Approved Mortgaged Banks
This is the List of CBN-Approved Mortgaged Banks:
Primary Mortgage Institutions
1 ABBEY MORTGAGE BANK
2 AG HOMES
3 AKWA SAVINGS
4 ASO SAVINGS & LOANS
5 BRENT (SKYFIELD) SAVINGS
6 CENTAGE SAVINGS & LOANS
7 CITY CODE
8 COOP SAVINGS & LOANS
9 DELTA MORTGAGE FINANCE
10 FBN MORTGAGES
11 FHA HOMES LTD.
12 FIRST GENERATION HOMES
13 GATEWAY SAVINGS
14 GLOBAL TRUST
15 HAGGAI MORTGAGE BANK
16 HOME-BASE MORTGAGE
17 IMPERIAL HOMES
18 INFINITY TRUST
19 JIGAWA SAVINGS & LOANS
20 JUBILEE-LIFE MORTGAGE BANK
21 KEBBI STATE HOMES
22 LAGOS BUILDING & INVESTMENT
23 MAYFRESH MORTGAGE BANK
24 MGSL MORTGAGE BANK
25 MUTUAL ALLIANCE
26 NEW PRUDENTIAL
27 NIGERIA POLICE MORTGAGE BANK
28 OMOLUABI (LIVINGSPRING)
29 PLATINUM MORTGAGE BANK
30 REFUGE HOMES
31 STB BUILDING SOCIETY
32 TRUSTBOND MORTGAGE BANK
