The Central Bank of Nigeria (CBN) reduced the Monetary Policy Rate (MPR) by 125 basis points to 26.25% on January 7, 2026 – the first rate cut since June 2024. This move signals the beginning of monetary easing after 18 months of aggressive tightening to combat inflation (currently 24.8%).
Immediate & Projected Impact on Mortgage Rates
- Commercial Banks (Tier-1: GTCO, Zenith, Access, UBA, Stanbic IBTC)
- Current rates (pre-cut): 23–26%
- Expected new range within 60–90 days: 20–23%
- Example: ₦100M loan over 15 years
- Old rate (24%): monthly ≈ ₦1.05–1.1M
- New rate (21%): monthly ≈ ₦930k–970k
- Savings: ₦80k–130k per month (~₦14–23M over loan life)
- FMBN (Federal Mortgage Bank – Renewed Hope Cities/NHF)
- Current rate: 9.75% fixed (first 5 years)
- Projected: 8.5–9.25% by Q2 2026 as MPR continues downward
- Example: ₦30M loan over 20 years
- Current: monthly ≈ ₦280k–290k
- At 8.5%: monthly ≈ ₦260k–270k
- Savings: ₦20k+/month
- Hybrid Strategy (Most Popular Move Right Now)
- Take maximum FMBN loan (₦50M @ 9.75%)
- Top-up balance with commercial bank (now expected 20–23%)
- Blended effective rate: 13–16% (vs 24–26% straight commercial)
- Real example from Q4 2025: ₦120M Lagos flat buyer blended rate 15.2% → monthly payment dropped from ₦1.28M to ₦1.05M after similar cut
Who Benefits Most in 2026?
- First-time buyers (₦30–60M) → almost 100% should go FMBN or FMBN hybrid. Rates could fall to sub-9% by mid-year.
- Mid-market (₦80–150M) → hybrid becomes even more attractive with commercial rates dropping below 22%.
- Luxury (₦200M+) → developer financing (12–18%) still beats commercial banks, but gap narrows.
- Investors (buy-to-let) → lower rates increase leverage → higher net yields (especially short-lets at 15–22%).
Risks & Action Steps in January 2026
- Rates may not drop immediately (banks take 60–90 days to adjust)
- Inflation still high (24.8%) – fixed-rate portions (FMBN) are safest
- Action now:
- Pre-qualify with FMBN + 2 commercial banks
- Lock rate if buying off-plan (many developers freeze rates upon deposit)
- Refinance existing loans if above 20% (savings can be massive)
This first cut is the clearest signal yet that borrowing costs for real estate are finally easing in 2026. The window to lock long-term fixed or semi-fixed rates is open – act before the next MPC meeting.
Join the conversation: What’s your 2026 home financing plan? Drop your target loan amount below!
Disclaimer: This is general information only. Mortgage rates change frequently. Always verify with lenders.
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