Stakeholders Express Fear Over Guidelines For Accessing NHF Loan


Stakeholders in real estate sector have expressed mixed reactions to the downward review of National Housing Fund (NHF)’s loan from N15 million to N5 million by the Federal Mortgage Bank of Nigeria (FMBN).

While some described the reversal as a policy summersault on the part of FMBN barely 10 years after it did an upward review, others are of the opinion that the new policy would afford more low-income earners the opportunity to have access to the fund for home ownership.

The reversal to the old rate by the apex housing bank is contained in a document obtained by New Telegraph entitled: “Revised FMBN Underwriting Guidelines for Accessing NHF Loan.”

The guidelines

Apart from other changes, major alterations noticeable in the revised guidelines had much to do with application for the NHF loan and tenor.

Under application for loan, the new underwriting standard stipulates that the borrower will be entitled to a maximum loan of N5 million as against the previous N15 million .

The document states: “The borrower is entitled to a maximum loan of five million naira (N5,000,000.00) or as determined by the bank.

Loan amount of N5 million and below equity contribution for FMBN funded estates will be capitalised and paid within 24 months and for applicants in structured employment.

“Other non-funded estate appli-cant is to pay 10 per cent equity.” For loan amounts and equity contribution, applicant seeking N5 million is required equity payment of 10 per cent, while borrowers in need of housing loan from N5 million to N10 million are required equity payment of 20 per cent. Anyone seeking loan from N10 million to N15 million is required equity payment of 30 per cent. Also, the tenor of NHF loan was reduced to 25 years instead of 30 years in the new underwriting standard guidelines.

Stakeholders’ view

Speaking with this newspaper, President, Real Estate Developers Association of Nigeria (REDAN), Mr. Ugochukwu Chime, stated that reversal of NHF loan to N5 million was unsustainable in the face of high cost of building materials.

He said: “This is policy summersault without consideration for current realities. We will oppose the proposal at REDAN meeting coming up this month.

“What is the interest rate regime now? I see this thing as an emotion issue.” In other climes such as United Kingdom, he pointed out that government made provision for social housing through subsidy with council houses, adding that government paid 10 per cent of the housing cost.

Vice President of REDAN in the South West, Mr. Taiwo Ogunmodede, expressed surprise over the sudden reversal by FMBN, saying: “I don’t know how far the amount can go in the face of current economic recession.”

President, Mortgage Bankers’ Association of Nigeria (MBAN), Mr. Femi Johnson, said that his association was quite aware of the reversal.

He explained that FMBN meant well for Nigerians, adding that reduction in NHF loan to N5 million was to encourage more people especially low-income earners to partake in the disbursement of fund to own their house.

A former Head of Department, Corporate Affairs of FMBN, Mr. Lawal Isa, explained that issues of home affordability was responsible for the policy reversal on NHF loan.

According to him, it has been observed that many contributors (low-income group) to NHF could not access loan due to high cost of housing units under the scheme.

He added that the N15 million facility only provided opportunity for developers to take advantage of average Nigerians by building houses that are out of their reach in terms of affordability.

According to him, the revised underwriting standard will ensure that only developers that are interested in building low-income houses at N5 million approach the bank for loans.


The National Housing Fund (NHF) scheme was established in 1992 to address the constraints to the mobilisation of long term funds for housing finance and ensure that every Nigerian has access to housing loans at affordable interest rate through participation and contribution to the NHF.

The overall objective is to provide cheap source of loanable funds to nurture and sustain the mortgage industry and eventually facilitate affordable home- ownership for the low and medium income groups in the country.

It was gathered that there were about four million Nigerians that are registered and are contributing to NHF, while FMBN has been able to provide mortgage loans to about 60,000 contributors.

Chief Executive Officer of H.O.B. Housing Estates Limited, Chief Olusegun Bamgbade, said that FMBN may not have reverted its policy to N5 million seal if it had not considered the implications of the reversal.

According to him, there is no problem with FMBN modifying its policies to accommodate the less privileged, but that major challenge to stakeholders was the way the apex housing bank changed the policy without much consultations.

He said: “What I have problem with is the uncoordinated, less consultative policy summersaults.

If the policy makers had consulted widely, they would have found out that the cost of most buildings are quite above N5 million these days.” He, however, advised FMBN to reduce NHF facility to a minimum of N1 million and maximum of N50 million in ratio.


From the entire underwriting guidelines, FMBN meant well for Nigerians in the low-income cadre, but all stakeholders, including developers and building material producers must be consulted and sensitised to ensure that policy on NHF facility works.


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