Housing finance commentator Victor Ogiemwonyi has called for the Federal Mortgage Bank of Nigeria (FMBN) to strengthen its role in Nigeria’s secondary mortgage market, using housing bonds, mortgage-backed securities and refinancing to mobilise long-term capital for homeownership.
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The proposal focuses on addressing a persistent constraint in Nigeria’s housing market: the limited availability of long-term finance that mortgage lenders can offer to homebuyers. Rather than relying mainly on public funds or individual lenders’ balance sheets, the model would connect mortgage lending more directly to Nigeria’s capital markets and institutional investors.
Under the proposed approach, FMBN would help mortgage lenders replenish funds tied up in existing housing loans, allowing them to finance additional borrowers. Housing bonds and mortgage-backed securities could provide channels for attracting investment from pension funds, insurance companies and other institutions with long-term investment horizons.
The proposal comes as high property prices, rising construction costs and limited access to affordable mortgages continue to restrict homeownership for many Nigerian households.
FMBN’s Secondary-Mortgage Role Could Unlock More Lending
A secondary mortgage market allows institutions to buy, refinance or provide funding against mortgages originated by primary lenders. This can help lenders recover capital committed to long-term loans and use it to issue new mortgages.
Ogiemwonyi’s proposal would position FMBN more strongly as a link between mortgage lenders and the wider financial market. Instead of depending solely on its own lending resources, the bank could help channel investment into eligible mortgage portfolios and support a more continuous supply of housing finance.
For example, a mortgage lender that has committed substantial funds to 15- or 20-year home loans may have limited capacity to issue additional mortgages. If it can refinance eligible loans through an effective secondary-market arrangement, it could release funds for new lending without waiting years for borrowers to repay their mortgages.
The model would not eliminate credit risk or create money without cost. Its effectiveness would depend on the quality of the underlying loans, the terms of refinancing, investor confidence and FMBN’s ability to manage the arrangements transparently.
Housing Bonds Could Attract Long-Term Institutional Capital
Housing bonds could allow FMBN or other eligible issuers to raise funds from investors and channel the proceeds into housing finance. Investors would provide capital in exchange for returns under the terms of the bond.
Pension funds and insurance companies could be important participants because their long-term obligations may make suitably structured housing investments relevant to their portfolios. However, their participation would depend on returns, risk, regulation, liquidity and confidence in the issuer.
For the housing sector, the potential benefit is access to a funding pool that extends beyond short-term bank deposits and limited public allocations. If the funds reach mortgage lenders on workable terms, they could support additional home loans and make mortgage funding more sustainable.
The key issue is whether the cost of raising this capital would allow lenders to offer mortgages that households can afford. If funding remains expensive, capital-market instruments may expand the supply of mortgage finance without substantially lowering borrowing costs for homebuyers.
Mortgage-Backed Securities Could Recycle Housing Finance
Mortgage-backed securities are financial instruments supported by a pool of mortgage loans. They can allow investors to provide capital against the repayments generated by those loans, creating another route for funding housing finance.
Under Ogiemwonyi’s proposed model, FMBN could help develop a market in which properly assessed mortgages are pooled or used to support investment instruments. The resulting funding could help lenders expand mortgage origination, subject to suitable legal structures, investor protection and risk controls.
The approach could also help diversify the sources of finance available to the housing sector. Instead of relying on a narrow pool of lenders, the market could draw on investors seeking long-term assets.
However, mortgage-backed securities require reliable property titles, enforceable loan contracts, accurate valuation, transparent information about loan performance and effective mechanisms for managing defaults. Without these safeguards, investors may demand high returns or avoid the instruments altogether.
Refinancing Could Help Lenders Issue More Mortgages
Refinancing is another central element of the proposal. It allows mortgage lenders to obtain funding against eligible loans or replace existing financing arrangements, potentially releasing capital for further lending.
For this to work at scale, FMBN would need adequate capital, clear eligibility rules and the capacity to assess mortgage portfolios. Lenders would also need to maintain responsible underwriting standards so that expanding credit does not come at the expense of repayment quality.
The proposed cycle is straightforward: lenders originate mortgages, eligible loans support refinancing or capital-market funding, and the funds released can support additional lending. Borrower repayments then help sustain the pool of finance over time.
The objective is not simply to increase the volume of loans, but to create a more dependable system for funding them over the long term.
FMBN’s Existing Mandate Provides a Starting Point
The proposal builds on functions already associated with FMBN’s role in Nigeria’s housing finance system. The bank’s stated mandate includes raising long-term funds through capital-market instruments and supporting secondary-mortgage activities, including refinancing and mortgage-backed securitisation.
Ogiemwonyi’s argument is that these functions should receive greater strategic emphasis so the institution can connect capital-market investors with mortgage lenders more effectively.
That would require more than issuing financial instruments. FMBN would need a strong capital base, credible governance, transparent financial reporting and operational capacity to manage complex funding arrangements. Investors would also need confidence that the risks and returns associated with housing finance are properly assessed.
The proposal therefore raises an institutional question: how can FMBN make its secondary-mortgage and capital-market functions effective enough to mobilise funding at a scale that meaningfully expands access to homeownership?
Affordable Mortgages Must Remain the Measure of Success
The value of a deeper mortgage market should ultimately be measured by whether more households can access and repay suitable home loans.
Longer repayment periods, including 15 to 20 years where borrowers’ incomes and lending assessments support them, could spread repayments over time. But loan duration alone cannot guarantee affordability. Interest rates, deposits, fees, income stability and the price of the property remain decisive.
There is also a risk that additional funding could primarily benefit higher-income borrowers if lenders concentrate on properties with stronger returns and borrowers with more secure earnings. Any expansion of mortgage finance would therefore need clear affordability objectives and lending products that reach underserved households.
The supply side matters as well. More mortgage funding will not necessarily bring down house prices if developers continue to face expensive land, weak infrastructure, high material costs and lengthy approval processes.
Ogiemwonyi’s proposal is ultimately about building a financing system that connects institutional capital to mortgage lending more effectively. Its impact would depend on whether FMBN can turn that structure into sustainable funding for homes that Nigerians can afford.
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