Jamaica News: Prime Minister, the Most Hon. Andrew Holness, has announced that the National Housing Trust (NHT) loan limit will move from $5.5 million to $6.5 million, an increase of 18 per cent.
“This increase is consistent with the estimated changes in construction cost per square foot since the last adjustment,” he said.
Mr. Holness was making his contribution to the 2019/20 Budget Debate in the House of Representatives on Tuesday (April 19).
He said the adjustments are being made to improve access to homeownership, given the expected increase in the provision of housing by the NHT.
“Without such assurances, take-up of intended output may be skewed towards the upper end of the target market. The adjustments will improve affordability levels for mortgagors, generally, but more importantly, for those in the lower bands,” he said.
The Prime Minister also announced a widening of the current income bands and a reduction in interest rates for all mortgagors.
“The ceiling for the lowest interest rate band will be increased to $15,000 per week from the current $12,000 per week, thereby allowing more persons to access the home grant, which is tied to this marker,” he noted.
He said, further, that persons in the $15,000 per week income bracket will now enjoy the same zero per cent interest rate as those earning $12,000 weekly.
The income band of $12,001 to $20,000, where persons paid two per cent interest, will now be moved to $15,001 and $30,000 with an interest rate of one per cent.
Additionally, there will be an adjustment of the $20,001 to $30,000 grouping at four per cent interest, moving to $30,001 to $42,000 at three per cent interest.
There will also be a five per cent interest rate for persons earning $42,001 or more. This is a revision of the income bracket of $30,000 or greater with an interest rate of six per cent.
Citing an example of the impact of the new mortgage rate structure, the Prime Minister noted that a person who earns $22,000 and took out a loan of $5.5 million, would have been paying an interest rate of four per cent, a monthly payment of $31,091. However, at the revised one per cent interest rate, that individual will now enjoy a reduced monthly payment of $22,000 saving $8,996 per month.
“Now is the time to build house! Now is the time to buy house! Now is the time to make that critical investment,” the Prime Minister stressed.
Mr. Holness noted that this undertaking will cost the NHT $1.2 billion, but some of the loss will be offset by a policy change, which will see the NHT transferring to income, unclaimed contributors’ refunds that remain in the Trust for 10 years after the refunds become due.
Source: JIS News