CBN’s MPR Reduction’ll Improve Access To Housing Finance, Says HDAN

The Housing Development Advocacy Network (HDAN) has disclosed that the decision of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) to reduce the Monetary Policy Rate (MPR) by 50 basis points from 27.00 per cent to 26.50 per cent would improve access to house finance.

It described the move as a positive step towards stimulating growth in Nigeria’s mortgage and real estate sector.

The group in a statement issued by its Executive Director, Barrister Festus Adebayo, noted that the MPR serves as the benchmark interest rate that directly influences lending rates across the banking and mortgage finance industry.

“A reduction in this rate is expected to lower the cost of funds for financial institutions, including primary mortgage banks and development finance institutions such as the Federal Mortgage Bank of Nigeria (FMBN) and the Nigeria Mortgage Refinance Company (NMRC), thereby creating opportunities for more affordable mortgage products for Nigerians”, HDAN stated.

According to HDAN, high interest rates have remained one of the most significant barriers to home ownership in Nigeria, particularly for low- and middle-income earners as well as young people who constitute a large percentage of the nation’s population but remain largely excluded from the formal housing finance system.

“The Network believes that the reduction in the MPR will, over time, translate into lower mortgage interest rates, improved access to construction finance for developers, and increased viability for affordable housing projects across the country.

“This development is expected to reduce the cost burden on developers who rely on commercial bank loans for housing delivery, where financing costs currently account for up to 30–40 per cent of total housing project expenses”, it added.

HDAN further stated that improved access to financing will likely encourage developers to resume stalled housing projects, expand off-plan housing schemes, and offer more flexible payment options to prospective homeowners.

“This will ultimately enhance housing supply, reduce the affordability gap, and provide more Nigerians with the opportunity to transition from tenancy to home ownership.

“In addition, the Network notes that increased housing development activity resulting from improved financing conditions would stimulate job creation across the housing value chain, including artisans, building material manufacturers, and construction professionals, thereby contributing to economic growth and skills development in the sector”, it stated further.

HDAN, however, cautioned that the full benefits of the MPR reduction may not be immediately felt due to existing structural challenges such as high inflation, land acquisition bottlenecks, regulatory constraints, and infrastructure deficits.