For Nigerians whose salaries are below N500,000 per month, there is no mortgage facility anywhere in the country for them; not out of choice, but because they are priced out.

This explains why mortgage penetration in the country is still below 1 percent, despite the housing deficit in the country which is in excess of 20 million units, according to experts.

With interest rates ranging from 18 percent to 27 percent, going by the recent Monetary Policy Committee (MPC) rate cut, access to mortgage is not only limited, but also a daydream for home seekers most of whom are low-income earners.

“At the prevailing rates, home ownership is largely unrealistic for the average Nigerian earning below, say, N500,000 per month,” Adedeji Ajadi, the chief executive officer, Mortgage Banking Association of Nigeria (MBAN), affirmed.

Ajadi explained that mortgage repayment for even a modest home exceeds 40 percent of monthly income which, according to him, is far above global affordability thresholds.

Even at 33 percent which is the statutory repayment amount, many Nigerians cannot still afford mortgage because even most of the so-called middle class workers earn less than N300,000 per month. Paying 33 percent of this amount leaves the borrower under intense pressure from other household and personal needs.

Ajadi, who spoke in a recent interview with the media, added that this affordability issue leads to a preference for self-construction or informal housing by most home seekers.

“There is a need for innovative interventions through subsidised interest rates, credit guarantees, or scalable alternatives like rent-to-own and shared equity models,” he said.

He attributed the low mortgage penetration to several factors, especially the fact that most Nigerians lack access to formal financial systems and so, cannot meet the requirements of mortgage institutions, including verifiable income and formal employment.

“Secondly, affordability is a major constraint; high interest rates and short tenures make mortgages unaffordable for the average Nigerian. Third, legal and administrative barriers such as land titling and foreclosure processes discourage lenders. Lastly, a general lack of awareness and trust in the mortgage system leads many to prefer incremental or informal homebuilding,” the CEO noted. (Business Day)