FG plans 12% interest on low-cost homes

The Minister of Housing and Urban Development, Ahmed Dangiwa, in a recent statement revealed that the government is targeting a 12 per cent mortgage interest rate as part of its broader efforts to make homeownership more accessible to Nigerians.

Speaking to an international audience at the Saudi Arabia real estate forum, Dangiwa underscored the immense opportunities within Nigeria’s real estate sector, particularly within the government’s Renewed Hope Cities and Estates Programme.

“Nigerians need homes now more than ever, and you can partner with the Nigerian government to deliver these houses at scale,” Dangiwa said.

The Nigerian government has recognised the urgent need to address the country’s staggering housing deficit, which stands at an estimated 28 million units.

The minister emphasised that this gap presents a significant investment opportunity for both local and foreign investors.

“The real estate sector contributed around 5.2 per cent to Nigeria’s GDP in 2024, and the market is expected to reach N2.25 trn by the end of 2025,” Dangiwa noted.

Despite the sector’s growth, challenges remain, especially in the affordability of homes.

High mortgage interest rates, which have historically ranged from 28 per cent to 30 per cent , have made homeownership a distant dream for many Nigerians.

To counter this, Dangiwa announced that “the government is working to introduce a Real Estate Investment Fund that would offer mortgage interest rates as low as 12 per cent, significantly improving affordability for middle- and low-income Nigerians.”

“To achieve this, we are expanding the Federal Mortgage Bank of Nigeria and recapitalising it with N500 bn to provide more accessible single-digit mortgage products,” Dangiwa said.

Additionally, he mentioned that rent-to-own schemes would be introduced, allowing applicants to pay rent in monthly installments instead of upfront lump sums.

The minister also addressed concerns about the balance between profitability for developers and affordability for buyers.

“We are using incentives such as bankable off-take guarantees, facilitated land access, and low-interest financing to encourage investment in affordable housing,” he explained.

Beyond affordability, Dangiwa highlighted the importance of sustainability in the housing sector.

He revealed that the ministry is collaborating with international partners like the International Finance Corporation to integrate green building practices into Nigeria’s housing development.

The government is also working to establish building materials manufacturing hubs across Nigeria’s six geopolitical zones to reduce reliance on imported materials, cut costs, and create jobs.

With these initiatives, Dangiwa reaffirmed Nigeria’s commitment to creating a thriving real estate sector.

“We are building a conducive environment for real estate growth through strong policies, regulatory frameworks, and investment incentives,” he said.

He emphasised the government’s collaboration with state governments and the Nigeria Governors’ Forum to streamline land access and improve urban planning.