CBN Cancels Interest Rate Limits for Mortgage Finance
By Adedapo Adesanya
The Central Bank of Nigeria (CBN) has announced the cancellation of interest rate cap for mortgage finance and lending fees for mortgage financing in the country.
In a circular addressed to all Other Financial Institutions (OFIs) and Mortgage Sector Stockholders in Nigeria, it was revealed that the change was due to some implementation challenges regarding the mortgage finance section of the Guide to Charges by Banks and Other Financial Institutions in Nigeria issued in 2017.
The circular, signed by the apex bank’s Director of Financial Policy and Regulation Department, Mr Kevin Amugo, read: “Our attention has been drawn to some implementation challenges in respect of Part 2 Section 2.1 .3 (Mortgage Finance) in respect of the maximum cap of MPR + five per cent placed on mortgage finance rates.”
The central bank noted that with effect on Monday, September 09, 201, the section of the document that deals with mortgage financing would reflect the new amendment, which removes the maximum MPR + 5 percent charge to “negotiable.
“The CBN after due consideration of the concerns of stakeholders, hereby amend Part 2 (A & B): interest Rate and Lending Fees Subsection 2.1 .3 Mortgage Finance to read “NEGOTIABLE”.
“Please note that “subject to a maximum of MPR + five per cent” is no longer applicable.
“This new provision takes effect from September 9, 2019,” the circular stressed.