HDAN Raises Alarm Over Rising Mortgage Defaults

The Housing Development Advocacy Network (HDAN) has expressed serious concern over the rising level of loan defaults by customers of mortgage banks in Nigeria.

The advocacy group warned that the situation could further weaken the already fragile housing finance system if urgent measures are not taken.

It noted that while efforts are being made to expand access to mortgage finance and promote homeownership, the increasing rate of loan default poses significant risks to mortgage institutions and could discourage long-term investment in the housing sector.

The group in a statement issued in Abuja by its Executive Director, Barrister Festus Adebayo, observed that construction loans appear to be the most affected category of mortgage lending, and stated that the rising default rate in this segment has significantly contributed to the financial challenges currently faced by many mortgage banks in the country.

According to HDAN, construction financing is a critical component of the housing delivery chain, as it enables developers to build new housing units.

The group noted that the growing inability of some borrowers and developers to meet their repayment obligations has placed enormous pressure on mortgage banks, with some institutions struggling to remain stable.

The organisation, however, called on the Federal Government and relevant financial authorities to establish a Mortgage Guarantee Company to help mitigate risks associated with mortgage lending.

According to the statement, a Mortgage Guarantee Company would provide credit guarantees that protect lenders against borrower default, thereby encouraging banks and financial institutions to extend more mortgage loans to Nigerians, especially low and middle-income earners.

It explained that the absence of effective risk-sharing mechanisms in Nigeria’s housing finance system has made mortgage lending extremely cautious and limited, leaving millions of Nigerians unable to access affordable homeownership opportunities.

HDAN stated that the government’s intervention is required to address the rising default in construction loans which are essential to housing supply.

It noted that many countries with successful mortgage systems operate mortgage guarantee institutions that support lenders, improve credit access and stimulate housing development.

The advocacy group stressed that the proposed Mortgage Guarantee Company would not only protect lenders but also help attract private sector investment into housing finance, expand mortgage accessibility and ultimately increase housing supply.

HDAN reiterated its commitment to working with the Federal Government, the National Assembly, mortgage institutions and other stakeholders to strengthen Nigeria’s housing finance framework and promote sustainable homeownership.