President’s housing loan to teachers

Oct 11, 2023 Editorial

Kaieteur News – Teachers getting up to $15 million in mortgages for buying a home have a nice ring. At a rate of 3.75% for such loans, the eardrums are quivering. A round of applause is due to President Ali for that grand announcement, which must have inspired many teachers. Now there are some questions for the President, and they all have to do with the practical aspects of his announcement.

How are those $15 million loans going to happen? Which bank is going to be found to offer those low interest rate loans? What would be the incentive for those banks that may be interested, those financial institutions that could be cajoled, to lend at 3.75 percent, when interest rates are where they are today? Considering what such $15 million loans would do for housing that is needed, the question must be asked: where does such a loan, if and when taken, leave the new mortgage holder and homeowner, relative to the long list of their other urgent needs?

We are all for $15 million special home loans for teachers, let that be fully understood. But banks make one of the biggest slices of their earnings from home loans. The interest that they charge is not 3.75 percent, which is more than 2 percent under the going rate for noncommercial mortgage loans. In a matter of days, the banks are going to be at the table, and will hear about what measures the government (and president) have in mind. The challenge for banks is how they are going to make this work for their own profit projections. It can be a success, but if a few thousand teachers were to take advantage of what the PPPC Government puts in place for special home loans, then the institutions that participate in this lending programme will have to figure out what is in for them, considering their lost interest revenue. Where is the quid pro quo from the government, and what form would such take?

To repeat, a special home loan for up to $15 million at 3.75 percent could have many takers from the ranks of teachers. But they protect themselves by weighing carefully what would be their monthly mortgage on such loans, even at the low rate of 3.75 percent. One quick note, we would hope that the 3.75 percent rate is fixed for the entire duration of the loan, and does not reset at any time, unless it is lower and favorable to loan holders.

Now for the potential loan beneficiaries themselves, teachers. There is a standard of a 20 percent deposit for mortgage loans, but this may vary from bank to bank. On a $15 million loan, that calls for a $3 million deposit, and this ignores the usual tacking on of fees and such. Are banks going to waive that in full, or in part? Or is the PPPC Government going to arrange some type of blanket guarantee for these special loan arrangements? In other words, the government commits to being the guarantor of such loans. Regarding the nuts and bolts of a mortgage loan, special or ordinary, one for $15 million for 30 years at 3.75 percent is about $55,000 in monthly payments.

That would be almost half the monthly gross pay of the average teacher. Perhaps, the government has some relief in mind with a higher tax exemption (‘free pay’) threshold. If the government isn’t, then approximately $60,000 is what teachers would be left with to manage a spiraling cost-of-living environment, plus the other basics of life. This includes transportation, clothing, and caring for emergencies, either for self, children, or elderly dependents.

If nobody else is willing to say it, then we have to: suddenly this impressive idea of special home loans for as much as $15 million at 3.75 percent takes on an entirely new complexion. It is not a healthy one, but one that smacks of slavery, with the difference being that there is a 30-year (or 15-year) time limit. It should be noticed that we avoided commenting today on union busting, or government’s going at matters alone again. The special home loan looks good on paper, the devil lies in what is behind it.

$15 million, announcement, Editorial, mortgages, teachers

Latest News

President’s housing loan to teachers

Related

Similar Articles

The Glenn Lall Show|| February, 10th, 2025

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

Fitness Express helps to fuel GAPLF Novices/Juniors Championship on...

Brackenridge ready to lead Slingerz FC to Elite...

Day 2 abandoned due to rain, as teams pray for...

Shamar Joseph ‘Shocked and Honoured’...

One Guyana Mashramani Softball Cup set for Sunday...

Eagles survive shaky start on Rain-affected...

Features/Columnists

Protest electoral tyranny

OAS Secretary General Election and renewed OAS Consensus

Jagdeo, deflector-in-chief

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]

President’s housing loan to teachers

Share this:

Related

Similar Articles

The Glenn Lall Show|| February, 10th, 2025

Follow on Tik Tok @Glennlall

THE BLUNT OF THE DAY

Sports

Features/Columnists

Publisher’s Note

Weekend Cartoon

Bridge Watch

Demerara Harbour Bridge

> Berbice Bridge […]