NBS has reached its limits - Jagdeo

NBS has reached its limits – Jagdeo

Nov 06, 2009 News

– commercial banks can now issue mortgages up to $8M

Government has announced that commercial banks will enjoy a tax rebate on mortgage loans that will allow homeowners to borrow up to $8M from that sector.
Before, commercial banks could have only issued mortgages for up to $3M, using this tax break.
Additionally, President Bharrat Jagdeo announced yesterday, some $2B will be made available to senior citizens and vulnerable groups to assist them in owning their homes.
At a press conference at the Office of the President, yesterday, Jagdeo noted that for sometime the administration has been pushing for an expansion of credit to the housing sector.
“As you are aware for sometime now, I have announced an enhanced focus on housing… that we plan to spend some $6B over the next few years to enhance infrastructure to develop 20,000 house lots so that the demands that we have could substantially be reduced.”
Explaining, the Head of State said that the facility of $2B will target single parents and senior citizens who for one reason or the other are unable to meet criterion of either the New Building Society (NBS) or commercial banks.
With a huge demand for home financing, NBS has reached its limits, the President said. It just cannot continue to service the great demands out there.
NBS had enjoyed tax benefits that waived taxes on interest earned from the lent money. Government, sometime ago, had allowed commercial banks also to lend up to $3M in home mortgages with the same benefits.
“…so if the banks will not have to pay tax on income earned on loans, they can afford to lower the interest rates which many have done, particularly Republic Bank and Citizens (Bank),” Jagdeo explained.
He urged the commercial banks, which will now be benefiting from the increased limit of $8M, to be aggressive. “…and they have agreed that it is good business for their sector. So many people can now go into the commercial banking sector and borrow $8M and get an interest rate close to that of NBS.”
The President said that he hoped intervention will represent a huge boost to the housing sector.
Meanwhile, the President also revealed that government is examining several options of $2B that will be made available to senior citizens and vulnerable groups to build or own their homes.
The options include giving money to the banks to lend directly to applicants; the establishment of a revolving fund to construct houses or possibly a credit guarantee system where government will give a commitment to repay the banks should there be a default on the mortgage.

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