…as Govt expands financing options for housing drive
Just over a week after the Government had given approval to the New Building Society (NBS) to raise its loan ceiling, the Government will be granting the India-owned Bank of Baroda approval to offer mortgages to homeowners.
According to a notice, this move is in keeping with Government’s continued effort to increase access to mortgage financing for prospective homeowners as well as expand the housing drive countrywide.
It means that the Bank of Baroda, which was on the verge of exiting Guyana’s market back in 2018, will be designated as an approved Mortgage Finance Company in keeping with Section 15 of the Income Tax Act, Cap 81:01.
In this regard, it was also announced that the Finance Ministry will be hosting a ceremony today to formalise this process with the Bank of Baroda at the Arthur Chung Conference Centre (ACCC).
The Bank of Baroda
Last week NBS, which is already known for its low mortgage interest rates, announced a reduction in its interest rates. This is a measure that will likely bump up the number of new loans being granted.
During a brief ceremony at the ACCC on March 10, Finance Minister Dr Ashni Singh handed over approval to raise the loan ceiling from $12 million to $15 million. This measure will allow homeowners increased financing options when borrowing a loan.
In his address to the gathering, Dr Singh lauded the New Building Society’s commitment to reduce mortgage interest rates effective April 1. He recalled how the number of new homeowners applying for loans at NBS plummeted after 2014.
“(NBS) was giving approximately 1000 homeownership loans when we were in office… in fact, I should make the point that in 2014, our last year in office, NBS gave 896 new loans. In 2020, that number had fallen to 400. That tells a story,” Dr Singh had revealed.
“So, consider now, the Ministry of Housing rolls out their land distribution programme and 10,000 persons get their house lots this year. Let us say 1000 of those persons come into NBS and they borrow on average $10 million loans. That is literally $10 billion of construction activity.”
According to Minister Singh, the new measures are likely to not only boost the construction sector but the economy as a whole. He pointed out that material has to be purchased and labourers have to be employed.
Meanwhile, Chairman of the NBS, Floyd McDonald gave a breakdown of how the mortgage will be reduced. In the first instance, low-income loans of up to $6 million will see the interest rates being reduced from 4.25 per cent to 4 per cent per annum.
When it comes to loans between $6 million to $12 million, the interest rate will now be 5.95 per cent per annum, down from 6.15 and 6.75 per cent while loans above $12 million, up to $15 million, will be offered at a rate of 6.25 per cent annually.
“The Society is indeed appreciative of the improved ceiling approved by Government. We know that our collective efforts will redound to an improved standard of living for Guyanese,” the NBS Chairman said.
One of the measures outlined in the 2021 budget had been an increase in the loan ceiling. It is one of several measures the Government is pursuing in a bid to re-energise an economy stunned by the COVID-19 pandemic.
The measure also goes hand in hand with the Government’s drive to deliver on its promise of 50,000 house lots within its five-year term. (G3)
