Mortgage Insurance Act to be Amended to Assist Home Buyers

The Ministry of Transport, Works and Housing has received Cabinet’s approval for a proposed amendment to the Mortgage Insurance Act,aimed at making mortgages more accessible for persons seeking to acquire a home.

Minister with responsibility for Housing, Hon. Dr. Morais Guy, says this will allow for an increase from 90 to 97 per cent, the Mortgage Indemnity Insurance coverage of the appraised value, and for premium rates to become “more flexible”.

“Essentially, instead of the usual 15 per cent (which) home purchasers are now required to deposit as part of their sale agreement, the move would allow for a minimum deposit of 10 per cent of the value of the property, which would include the cost for transfer tax and stamp duty, which (are) usually paid up-front,” he outlines.

Dr. Guy was speaking at the official opening of the Caymanas Country Club Estate housing development in St. Catherine, on October 23.

The Minister further pointed out that because 97 per cent of the property’s value would be insurable, this would entitle purchasers to a refund on the difference between the initial deposit, and the sum of the approved mortgage.

“The amended Act will afford many persons, particularly new entrants to the workforce and new professionals who have qualified for mortgages, but do not have enough savings to meet the required 15 per cent deposit, the opportunity to acquire a house at an earlier stage in their working lives,” he said.

He  said the administration, through the Ministry and National Housing Trust (NHT), continues to implement “several strategic initiatives”  to achieve  that objective, including legislative changes, which will facilitate “ease of access” by mortgage market stakeholders, thus redounding to the benefit of developers.

“Leading this charge for the Ministry will be the Jamaica Mortgage Bank (JMB), which continues to be a major player in mortgage facilitation,” the Minister informed.

With respect to the NHT, Dr. Guy assured that the entity “remains in a healthy position” to provide housing services to developers and prospective home owners, despite concerns regarding the draw-down of funds from the entity to support the Central Treasury, as part of conditions under the current International Monetary Fund’s four-year Extended Fund Facility (EFF).

“This development at Caymanas Estate has benefitted from the Trust’s Interim Construction Financing Programme which, for this (2013/14) fiscal year, stands at $1.8 billion,” he stated.

The Minister advised that the facility will “remain in place’ to “show our commitment” to assisting developers in making homeownership “an anticipated expectation, rather than a pipe dream.”

Dr. Guy pointed out that with an overall current budget of approximately $23.8 billion, the NHT is able to ‘impact” developments before and after construction, through the provision of development and mortgage financing.

He explained that in the case of the latter, the NHT provides financing for prospective homeowners buying into private developments. These developments, he pointed out, “will go a far way” in complementing the 2,835 housing solutions projected for completion by the Trust during the current fiscal year.

A total of 684 two and three bedroom houses are being developed at Caymanas Country Club Estate by New Era Homes 2000 Limited on lands purchased from the Urban Development Corporation (UDC).

The units are being developed in two phases. The first, which has been completed, comprises 264 units, while the second, currently under construction, will provide an additional 420.