Nigeria’s apex housing finance institution, the Federal Mortgage Bank of Nigeria FMBN has launched its first Non-interest product in Kano called Ijarah Muntahia Bittamleek also known as Lease-to-Own.
According to the bank, the conventional interest-based mortgage model does not align with the personal convictions of some Nigerians arising from affordability, limited access, prompting the bank to mobilise contributions into the National Housing Fund (NHF) and facilitate access to affordable housing.
This is to help people access financial services that are consistent with their values and convictions.
Speaking at the Launch, FMBN Managing Director/Chief Executive Officer Shehu Usman said the objective is to widen the mortgage market and provide an additional pathway to homeownership such that eligible NHF contributors are not excluded from housing finance.
‘The product Ijarah Muntahia Bittamleek, is based on Islamic finance arrangement commonly described as Lease-to-Own. Under this structure, the customer occupies a property through a lease arrangement and subject to the agreed terms and fulfilment of the contractual obligations, ownership is transferred to the customer at the end of the arrangement,’ said the CEO.
He said the product is not for one religious community but an additional housing finance option for eligible NHF contributors who wish to access a non-interest based arrangement.
According to him, while the global Islamic finance assets have reached US$5.98 Trillion in 2024, Nigeria’s Islamic finance industry was estimated at over N4.4 trillion in 2024 from N2.5 trillion in 2023 and it is projected to rise.
The bank said it has dedicated a housing project financed by FMBN in Bichi as the pilot implementation of the Non-interest mortgage product.
Launching the product, Minister of Housing and Urban Development Engineer Muntaqa Rabe Darma said the product launch is consistent with the National Mortgage Industry Policy issued by the Ministry in July this year, directing FMBN to disburse at least 40% of each year’s NHF collection as mortgages and raise its loans ceiling from N50m to N80 million.
He also asked the bank to decide application within 30 working days, noting that the product will narrow the housing deficit in the country.
Darma said more than six million Nigerians contribute to the NHF yet fewer than 500 individual mortgages are booked in a year with many contributors staying away from the interest-bearing loans altogether.
With the launch of the product the Minister said the Bank is expected to process 2000 mortgages this year and 5000 by the year 2028.
He charged the bank to scale up from Kano to reach Lagos, Port Harcourt, Enugu,Ibadan, Sokoto and Maiduguri, saying President Bola Tinubu places housing at the heart of inclusive growth and his Renewed Hope Agenda.
Kano State Governor Abba Kabir Yusuf represented the Commissioner for Housing and Urban Development, Arch. Ibrahim Yakubu Adamu hailed the introduction of the product which he said will help expand access to housing finance.
He said a vast expanse of land in Lambu village was allocated and is being developed as a Renewed Hope City project.