Nigeria to Roll Out Interest Free Mortgages Under New FMBN–SEC Partnership

The Securities and Exchange Commission (SEC) and the Federal Mortgage Bank of Nigeria (FMBN) have unveiled a major joint initiative to develop a nationwide Non-Interest Mortgage (NIM) framework. The effort is aimed at reducing Nigeria’s estimated housing deficit of 28 million units.

The announcement was made on Friday at a high-level strategy meeting in Abuja, where both institutions outlined plans to create a mortgage system based on ethical, Sharia-compliant financing models. The collaboration is expected to expand homeownership access for millions of Nigerians who are currently unable to qualify for traditional, interest-based mortgage products.

For decades, Nigeria’s housing crisis has been worsened by limited financing options, especially for citizens who require non-interest or faith-aligned alternatives. The new partnership between the SEC and FMBN is positioned as a transformative step toward addressing this long-standing challenge.

SEC to Strengthen Regulatory Support for Sukuk and Non-Interest Products

SEC Director-General, Dr. Emomotimi Agama, emphasized the Commission’s role in providing a solid regulatory foundation for the proposed mortgage scheme. He noted that the SEC will create frameworks for Sukuk issuances and other non-interest capital market instruments that will support the NIM programme.

“Our partnership with FMBN is essential for unlocking sustainable, long-term capital for housing,” Agama said. “With a clear regulatory structure for non-interest mortgage-backed instruments, we will be able to attract ethical investors both locally and internationally and support a continuous cycle of funding, construction, and homeownership.”

Agama added that a well-designed NIM ecosystem will enhance investor confidence, improve market stability, and strengthen the overall financial system.

FMBN: New Model to Expand Affordable and Inclusive Homeownership

Managing Director and CEO of FMBN, Mr. Shehu Osidi, explained that this collaboration will help address one of the limitations of the current National Housing Fund (NHF) scheme. The interest-based nature of the NHF has historically excluded many Nigerians, especially those who follow Islamic finance principles.

“For many years, a significant segment of our population has been unable to benefit from the NHF because conventional mortgages are interest-based,” Osidi said. “Our work with SEC is a deliberate effort to bridge this gap. We are committed to creating mortgage options that are ethical, inclusive, and sustainable over the long term.”

Housing and finance analyst Mr. Ebilate McYoroki praised the initiative, describing it as “long overdue.” He noted that it could unlock demand among potential homeowners and investors who have been on the sidelines due to the absence of acceptable financing structures.

“This is a strong step toward greater financial inclusion,” he said. “If the system is implemented transparently, it could significantly increase the rate of housing delivery across the country.”

How the Non-Interest Mortgage Model Works

The NIM framework will be built on Islamic finance principles that avoid interest and rely on shared ownership, asset-backing, and fair, pre-agreed returns. Key models under consideration include:

Musharakah (Diminishing Partnership):
The bank and the customer jointly purchase the property. Over time, the customer gradually buys out the bank’s ownership portion until full ownership is achieved.

Ijara (Lease-to-Own):
The bank acquires the property and leases it to the customer. Rental payments contribute to eventual ownership transfer.

Murabaha (Cost-Plus Sale):
The bank purchases the property and sells it to the customer at a pre-agreed markup, which is paid in installments.

Broader Economic Impact Expected

When fully rolled out, the non-interest mortgage system is expected to stimulate new construction, create employment opportunities, and increase financial inclusion nationwide. The initiative aligns with the federal government’s broader economic development agenda and has the potential to significantly reshape Nigeria’s housing market.