The Central Bank of Nigeria (CBN) has removed the interest rate cap regulation on interest rate and lending fees for mortgage financing in the country.
In a circular to Other Financial Institutions (OFIs) and mortgage sector stakeholders posted on its website at the weekend, the CBN said that the move was due to “some implementation challenges” regarding the mortgage finance section of its 2017 “Guide to Charges by Banks and Other Financial Institutions in Nigeria.”
The apex bank stated that henceforth the section of the document that deals with mortgage financing has been amended, and now has the word, “negotiable” to replace the interest rate cap.
The circular reads in part: “The CBN in 2017, issued the Guide to Charges by Banks and Other Financial Institutions in Nigeria, to moderate charges on various products and services offered by banks and Other Financial Institutions (OFls) in Nigeria.
“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 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 Please note that “subject to a maximum of MPR + five per cent” is no longer applicable.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.”