NHT’s new measures make mortgage loans more attractive

Over the past 15 months, the National Housing Trust (NHT) has introduced new measures, allowing more qualified contributors an opportunity to access homes previously a challenge for them.
Speaking on his monthly call in programme ‘Jamaica House Live’, on Wednesday November 24, Prime Minister, the Hon. Bruce Golding, noted that the NHT has introduced “some remarkably innovative policies” aimed at helping more people to obtain a house; a major problem for many families.
He noted that there are persons who have been contributing to the NHT for years and have never been able to benefit, for a variety of reasons including inadequate income, or inability to identify a house within their price range.
“What we have done is that, we have looked at the hurdles that have prevented many people from obtaining a house, and we have worked some really interesting new policies to see how can we help more of these people to own their own home,” the Prime Minister said.
He added that new lending policies have been introduced since September 2009, including two new policies he approved on Wednesday (November 24).
A total of 14 new policies have been introduced over the 15-month period, and Managing Director of the NHT, Cecile Watson, a guest on programme, said they have resulted in an increase in applications, particularly from young professionals.
“We have had a lot of interest, because people seem to like the policies…the take up started slowly, but we’ve seen where our letters of commitment have actually increased by about 18 per cent over the same period last year,” Miss Watson said.
Chairman of the National Housing Trust (NHT) board, Howard Mitchell, who was also a guest on the programme, said the main focus was affordability and accessibility for more contributors at a lower income level.
“Those policies dealt with, for the most part, the mortgage term to make the mortgage term longer, so that the monthly payments would be less and allow contributors, who couldn’t put together the necessary deposit funding, to access the full amount of their contribution,” he said.
“The other focus was to try and catch the younger cohort of contributors, as well as the older cohort of contributors who had been contributing for a long time and who were not able to make up the money to buy the home,” he added.
In an interview with JIS News in August of this year, Manager of the Kingston and St. Andrew Branch of the NHT, Allison Beaumont Smith, said that since the implementation of the new measures, there has been a 53.6 per cent increase in open market loans for May, June and July, compared to the same period last year.
“So, this increased affordability has certainly caused an increase in the number of persons who visit us, the number of persons who call us and the number of loan applications,” Mrs. Beaumont Smith told JIS News.
She explained that the increase in the NHT’s loan limit, in addition to the decrease in interest rates, stimulated interest in the open market facility and resulted in the higher number of loans that were granted.
Announcing additional measures in Parliament in April this year, Mr. Golding had said that, as of May 1, mortgage rates would be reduced by one per cent across all four income bands, and that the maximum mortgage loans allowable would also be increased.
This increase in the ceiling saw loans for open market purchases and build-on-own land moving from $3.5 million to $4.5 million; serviced lots moving from $1.2 million to $1.5 million; construction loans from $2.3 million to $3 million; and home improvement loans from $1.2 million to $1.5 million.
The increased moratorium on build-on-own land loans and construction loans also helped more persons to access their benefit from the NHT.
The moratorium was extended from six to 12 months, which was reflected in the average 14 per cent increase in such loans accessed during the three-month period, compared to the same period last year.
Mrs. Beaumont Smith told JIS News that the Developers’ Incentive Programme, which aims to encourage private developers to build affordable houses for NHT beneficiaries, is also being pursued aggressively by the Trust. The programme saw the interest rate charged on interim construction loans reduced from eight per cent to three per cent, in relation to two-bedroom units delivered at a cost not exceeding $5.5 million and studio units not exceeding $3 million.
She said the NHT introduced developers to the policy, with several indicating plans to make use of the facility.
Among the other measures accounting for the increased interest in NHT home loans are: a no-deposit facility, where applicants for scheme units are no longer required to pay the five per cent down payment on a house; and a subsidy programme, under which the NHT allocates 40 per cent of its pre-tax surplus, at the end of each quarter, to provide subsidies to selected mortgage applicants.
There is also a Deferred Mortgage arrangement allowing applicants to qualify for a mortgage, equivalent to 60 per cent of the price of the house. The remaining 40 per cent is then converted into a deferred mortgage, to be repaid or refinanced at scheduled stages in the life of the first mortgage.