The Chief Executive Officer of the Mortgage Banking Association of Nigeria (MBAN), Adedeji Ajadi, has warned that homeownership remains out of reach for most Nigerians earning below ₦500,000 monthly, as mortgage repayments are crippled by soaring interest rates of between 18% and 27%.
![](https://thenigerialawyer.com/wp-content/uploads/2025/05/idrinstitute.png")
In an exclusive interview with Punch NG on the state of Nigeria’s housing sector, Ajadi noted that despite a staggering housing deficit of over 28 million units, the country’s mortgage penetration is still less than 1%. He attributed this to high inflation—peaking above 33% in 2024 and moderating only slightly to 23.71% in April 2025—persistent naira volatility, and escalating construction costs driven by imports.
Ajadi said mortgage costs for modest homes now consume more than 40% of average household incomes, far above the global affordability benchmark of 30%. “This leaves many Nigerians with no choice but to self-build incrementally or turn to informal housing,” he explained.
He identified multiple barriers holding back mortgage adoption:
- Affordability: crippling rates, short tenures, and eroded incomes.
- Structural issues: defective land titling, cumbersome legal processes, and unenforceable foreclosures.
- Exclusion: the informal sector employing 85% of Nigerians lacks bank records or payslips to qualify for loans.
- Trust deficit: widespread skepticism toward mortgage institutions.
Ajadi urged reforms to digitize land registries, expand formal titling, and adopt alternative credit scoring methods using mobile money, utility payments, and remittance records. He also proposed flexible mortgage models, including micro-mortgages, income-linked repayments, cooperative lending, and “step-up” loans tied to career progression.
To slash costs and deepen access, Ajadi recommended:
- Expanding the Nigeria Mortgage Refinance Company (NMRC) to supply long-term liquidity.
- Government-backed subsidies through the Mortgage and Real Estate Investment Fund (MREIF).
- De-risking the system via guarantees and insurance schemes.
- Stabilizing macroeconomic conditions to tame inflation and naira volatility.
For young Nigerians, Ajadi advocated rent-to-own hybrids and shared equity schemes but acknowledged these remain underutilized due to weak partnerships, legal gaps, and poor transparency. He called for digital platforms to rebuild trust and scale delivery.
On diaspora remittances—over $20 billion in 2023—Ajadi said little is directed to mortgages due to fraud risks, opaque processes, and unsuitable products. He suggested creating diaspora-focused mortgage institutions with flexible terms, stronger enforcement, and securitization of mortgages into internationally rated bonds, similar to Kenya’s KMRC model.
Institutional investors such as pension funds also remain hesitant, despite PENCOM’s nudges, citing poor data, valuation inconsistencies, and inefficient foreclosure systems. “Robust oversight, standardization, and reliable risk frameworks are essential to unlock this pool of long-term capital,” Ajadi stressed.
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