The Ministry of Finance Incorporated (MOFI) is turning to Nigeria’s capital market to mobilise long-term funding for affordable housing, mortgages and related infrastructure as the country continues to grapple with a severe housing shortage.
The strategy will use the MOFI Real Estate Investment Fund (MREIF) to attract pension funds and other institutional investors into housing finance. The objective is to increase access to longer-term mortgages and support the government’s One Million Homes Presidential Initiative.
The move comes as policymakers face a housing deficit estimated at 14.925 million units in 2025 by Nigeria’s National Housing Data Technical Committee.
This means that increasing mortgage availability alone will not resolve the housing crisis. More homes must also be developed at prices that ordinary Nigerians can afford.
MREIF expands mortgage financing across 27 states
MREIF has already moved beyond the planning stage, with its mortgage programme recording increased activity across the country.
By August 2026, the fund had deployed ₦140 billion through 21 financial institutions to create 2,018 mortgages across 27 states, according to figures published by the State House.
The August figure represents an increase from the ₦128 billion deployed to support 1,859 families across 25 states as of June 2026.
The expansion is significant because mortgage activity in Nigeria has traditionally been concentrated in major property markets such as Lagos and Abuja.
By working through financial institutions, MREIF is seeking to extend mortgage access to more parts of the country.
The fund is structured to provide credit facilities to eligible banks and mortgage institutions, which then originate residential mortgage loans for qualified borrowers.
Under the arrangement, participating financial institutions retain the associated credit risk and are responsible for property due diligence and loan disbursement.
This structure allows MREIF to use existing lending institutions and their relationships with borrowers rather than creating an entirely new mortgage distribution network.
Capital market to provide longer-term funding
The capital-market strategy addresses a structural weakness in Nigeria’s mortgage system.
A mortgage can run for 15 or 20 years, while financial institutions often operate with funding sources that have shorter maturities. This mismatch can make long-term mortgage lending more difficult and expensive.
MREIF is designed to connect long-term institutional capital with residential mortgage lending.
MOFI has described the fund as a public-private financing structure, with a broader ambition to mobilise up to ₦1 trillion for housing and related infrastructure.
Its initial capital mobilisation has included a ₦150 billion Series 1 transaction and a ₦100 billion Series 2 offering, bringing the two transactions to ₦250 billion.
The approach therefore seeks to make housing finance an investable opportunity for institutional investors while directing capital towards residential mortgages.
Pension funds are particularly relevant because pension savings represent long-term pools of capital. Nigeria’s pension industry had assets of about ₦26.09 trillion as of September 2025, although most of the funds remained invested in government securities and other permitted asset classes.
PenCom’s revised investment regulations also provide a framework for pension investment in instruments such as Real Estate Investment Trusts, subject to applicable requirements.
However, pension funds cannot simply invest in housing because of its social importance. Investments must meet regulatory requirements, risk standards, return expectations and governance obligations.
Mortgage terms offer longer repayment periods
One of the potential benefits of the MREIF model is the availability of longer-term mortgage financing.
The State House reported that mortgages under the programme can run for up to 20 years at a fixed interest rate of 9.75 per cent.
Borrowers are required to provide a minimum 10 per cent equity contribution.
These terms could reduce the immediate financing pressure on eligible homebuyers compared with purchasing a property entirely from personal savings or relying on short-term commercial credit.
However, the availability of longer mortgages does not automatically make housing affordable.
The price of the property remains critical. A household may have access to a 20-year mortgage but still be unable to purchase a home if the property price is too high relative to its income.
This makes housing supply an important part of the financing equation.
Housing supply remains a major challenge
Nigeria’s housing shortage means developers must also be able to produce more homes at prices that potential mortgage borrowers can afford.
Developers require access to land, infrastructure and construction finance. Delays in these areas can increase development costs and ultimately raise property prices.
Land administration is another concern.
Mortgage lenders need confidence that properties offered as collateral have identifiable and enforceable titles. Delays in obtaining or perfecting title documents can increase transaction costs and make lenders more cautious.
MREIF places property due diligence responsibilities on participating financial institutions. Consequently, the quality of land documentation remains important even when mortgage funding is available.
The same applies to developers. Slow approvals, difficult land processes and inadequate infrastructure can increase the cost of delivering housing.
Pension funds and regulation remain important
The wider pension investment environment is also evolving.
In February 2026, the National Pension Commission issued an addendum to its revised investment regulations after identifying implementation challenges involving investment limits and the shortage of qualifying alternative-asset instruments.
The changes increased permitted limits for ordinary shares in several Retirement Savings Account fund categories.
Although the changes were not specifically an approval for MREIF, they demonstrate the broader regulatory environment in which institutional investors are considering opportunities beyond traditional investments.
MOFI’s objective is therefore not simply to channel pension savings into individual houses.
Instead, the proposed structure seeks to create regulated investment opportunities while directing institutional capital towards mortgage finance.
₦1 trillion ambition remains a long-term target
MREIF’s current figures demonstrate growing mortgage activity, but the scale remains small compared with a national housing deficit approaching 15 million units.
The ₦140 billion already deployed through the programme is significant, yet it should not be interpreted as a solution to the national shortage.
Similarly, the ₦1 trillion ambition represents a broader financing platform that MOFI hopes to build over time rather than money already delivered to households.
In August 2026, ARM Investment Managers’ Head of Real Estate Investment, Olubiyi Adekunbi, said the fund had recorded more than ₦140 billion in mortgage disbursements since operations began, with beneficiaries across 27 states.
The wider question is whether the capital-market model can continue attracting institutional funding while ensuring that mortgage borrowers receive accessible terms.
For the strategy to have a meaningful effect, financing and housing supply must grow together.
More mortgage funding without enough affordable homes could increase demand for a limited supply of properties. Conversely, constructing more homes without affordable long-term financing could leave completed units beyond the reach of many Nigerians.
MOFI’s capital-market strategy therefore addresses an important financing gap, but its broader impact will depend on several factors, including housing prices, land administration, property titles, mortgage underwriting, construction costs and institutional investment.
MREIF’s expansion across 27 states shows growing activity in Nigeria’s mortgage market. However, addressing a housing deficit of 14.925 million units will require sustained investment in both housing finance and the actual supply of affordable homes.
The success of the initiative will ultimately depend on how effectively these two sides of the housing market develop together.