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Effective August 15 this year, loan applicants to the National Housing Trust (NHT) will benefit from increases in loan limits, reduced interest rates and adjusted income bands.The adjustment will see the limit for non-homeowners increased from $1 million to $1.5 million for single applicants and from $2 million to $3 million for co-applicants for purchasing on the open market, build-on-own-land or the purchase of a scheme unit.
This was announced by Prime Minister P.J. Patterson in the House yesterday (July 20), while piloting a Bill to amend section four of the National Housing Trust Act to give the Trust legal authority to divert some $5 billion in a one-off transfer to finance the upgrade of educational facilities across the island during this financial year.
The Prime Minister said that serviced lot loans would be increased from $450,000 to $600,000 per single applicant and from $700,000 to $800,000 for co-applicants.
Home owners or home improvement loans have been increased from $400,000 to $600,000 for single applicants and from $800,000 to $1.2 million for co-applicants.
Meanwhile, Mr. Patterson said the income bands have been widened to allow persons earning a higher weekly income to pay lower interest rates. Under the arrangement, the corresponding interest rates for all existing income bands would be reduced by two per cent, except for persons already paying two per cent and those earning over $20,000 per week who would benefit from a one per cent reduction.
The Prime Minister said the NHT, as part of its corporate vision, recognized the nexus between having an educated population and securing both its contributory population and ensuring the capability of its beneficiaries to repay their mortgages.
He said that the decision by the Trust to make the payment to assist the Government in providing education and shelter for the children of their contributors, would not impair the ability of the Trust to meet its full obligations to contributors and beneficiaries.
Mr. Patterson said a rationalization of the National Insurance Scheme, the Education Tax, HEART, the National Health Fund and the NHT contributions to reduce the total percentage paid by employees and employers, which account for a significant percentage of the total payroll, was being looked at.
As such, the Finance Ministry has been mandated to identify options to reduce the employee-employer payload, produce a simplified system with a reduction in the number of pay-roll deductions, ensure that no institution was over funded to the detriment of any sector, and provide a sustainable flow of additional resources to improve the social sector, in particular health and education.
“This exercise should be completed in time for the next budget exercise and I do not anticipate that we will need to resort in the next financial year to a transfer of resources from the NHT.relating to the provision of NHT funds for the education system,” Prime Minister Patterson said.
Meanwhile, Opposition Leader Bruce Golding said while not disputing the need for the injection of the $5 billion or the use of the NHT to source it, the difficulty was with the call to amend the Act, as the provision could be made without the amendment, as presently the legislation governing the Trust allowed it to make such expenditures or investments.
“We feel that the way it is being done undermines the essential purpose for which the Trust was established. If what we are talking about is changing the scope of it, we should have called in all those stakeholders,” he said.
Mr. Golding said the Opposition was not convinced that the funding would be a one-off transfer, given the fact that some $22 billion was needed in funding for the sector annually over the 10-year transformation period, and questioned where the provision would come from in the ensuing years.
Mr. Golding said the Opposition could not give its support for an amendment to the Bill, as the members did not see a need to amend the provision in this case.
Finance Minister, Dr. Omar Davies said the way in which the transfer was being effected was far more transparent, while assuring that stringent measures were in place to ensure the money allocated would go towards the transformation.
Debate on the Bill was however suspended to allow for further consultation.
A 14-member Task Force was appointed in 2004 by Prime Minister P.J. Patterson to help transform the island’s educational system. It was charged with, among other things, making recommendations on financing from the basic to the tertiary level and determining the best allocation of resources; evaluating the Education Ministry’s structure, organisation and staffing and making recommendations about its effectiveness, and identifying the tools to ensure a first-rate educational system.
Based on the recommendations of the Task Force, it is estimated that the country will need to invest some $65 billion over ten fiscal years (2005-2014) for capital expenditure. The Task Force estimated that it would take $21.9 billion in additional funding annually to transform the education system.