Experts Call for Structural Reforms to Boost Mortgage-Backed Homeownership in Nigeria

Industry Leaders Outline Roadmap for Stronger Mortgage Market

Real estate and housing finance stakeholders have called for comprehensive reforms to Nigeria's mortgage market, arguing that expanding homeownership will require affordable financing, lower construction costs and stronger household incomes. The recommendations come as Nigeria continues to grapple with a significant housing deficit and one of Africa's least-developed mortgage markets.

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Industry experts say the country's mortgage system has struggled to support homeownership due to high lending costs, limited long-term financing and structural challenges affecting both housing supply and demand.

Mortgage market remains underdeveloped

According to industry estimates cited by stakeholders, Nigeria's homeownership rate stands at approximately 25% of the population, while the country's housing deficit is estimated at between 22 million and 28 million units.

Despite growing demand for housing, outstanding mortgage loans account for less than one per cent of Nigeria's Gross Domestic Product (GDP), with total outstanding mortgage assets remaining below ₦1 trillion. Experts say this reflects the limited reach of formal housing finance and the need for reforms that can expand access to long-term mortgage funding.

Three reforms identified as critical

Speaking on the future of Nigeria's mortgage industry, Odunayo Ojo, Chief Executive Officer of UPDC Plc, said sustainable mortgage-backed homeownership should rest on three key pillars.

The first, he said, is access to long-term mortgage loans at single-digit interest rates with repayment periods extending beyond 20 years. Ojo noted that initiatives such as the Ministry of Finance Incorporated Real Estate Investment Fund (MREIF) are intended to improve access to affordable mortgage financing.

Secondly, he identified the need to reduce the cost of housing delivery by lowering construction costs, improving infrastructure provision and simplifying access to land.

The third requirement, according to him, is stronger household income growth, arguing that mortgage schemes cannot achieve broad homeownership if most prospective buyers lack sufficient purchasing power.

High construction costs limit housing supply

Stakeholders noted that rising construction costs continue to constrain housing development across the country.

They argued that expensive building materials, infrastructure deficits, land acquisition costs and financing challenges increase the final price of homes, making mortgage-backed purchases inaccessible to many Nigerians.

According to Ojo, unless housing supply becomes more affordable, mortgage initiatives may primarily benefit higher-income households rather than addressing Nigeria's broader housing needs.

Real estate remains a major economic contributor

Industry stakeholders also highlighted the growing importance of real estate to Nigeria's economy.

Ojo observed that the sector has become one of the country's leading contributors to GDP while supporting employment across construction, building materials, professional services and property management.

However, he noted that the capital-intensive nature of real estate development continues to limit private sector participation despite intervention programmes such as the National Housing Fund (NHF), the Family Homes Fund (FHF) and the MREIF.

Similarly, Dotun Bamigbola, Senior Partner at Bamigbola Consulting, said the real estate sector contributes more than five per cent to Nigeria's GDP but requires deeper mortgage penetration and stronger institutional support to unlock its full economic potential.

Structural reforms seen as key to expanding homeownership

Industry experts identified several reforms that could strengthen Nigeria's mortgage ecosystem, including expanding long-term funding for mortgage institutions, modernising land registration and title systems, improving property documentation and introducing financing models that better reflect household income levels.

They argued that improving these structural foundations would increase mortgage accessibility, stimulate housing delivery and encourage greater private investment in residential development.

Conclusion

Stakeholders say improving mortgage-backed homeownership in Nigeria will depend on coordinated reforms across the housing finance ecosystem. While initiatives such as the MREIF are expected to improve access to long-term financing, experts maintain that affordable interest rates, lower construction costs, efficient land administration and stronger household incomes remain essential to expanding homeownership and reducing the country's housing deficit.

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