Omar Anderson, Gleaner Writer
Prime Minister P.J. Patterson speaking in Parliament last February. - RUDOLPH BROWN/CHIEF PHOTOGRAPHER
THE GOVERNMENT has announced a 50 per cent increase in National Housing Trust (NHT) loans effective August 15, this year. The move, which requires an amendment to the NHT Act, follows Government's announcement earlier this year that it would take $5 billion from NHT contributions to help transform the education sector.
The 29-year-old NHT has an accumulated $43.8 billion as at March 2005.
Speaking in the House of Representatives yesterday, Prime Minister P.J. Patterson, who has portfolio responsibility for the NHT, said loan limits for non-homeowners will be increased from $1 million to
$1.5 million for single applicants, and from $2million to $3 million for co-applicants purchasing houses on the open market, to build on own land, or to buy a scheme unit.
He added that loans to buy housing lots would
be increased from $450,000 to $600,000 for
single applicants, and from $700,000 to $800,000 for
co-applicants.
The Prime Minister also said that home improvement loans have been increased from $400,000
to $600,000 for single applicants
and from $800,000 to $1.2 million for co-applicants.
INCOME BANDS WIDENED
"Income bands have been widened to now allow persons earning a higher weekly income to pay a lower interest rate," he said. "An additional band has been added to include persons earning over $20,000 per week to pay lower interest rate."
Single applicants, including agricultural workers earning at least $4,800 weekly, will now be able to buy a one-bedroom unit.
Mr. Patterson added that the NHT expects a general 20-25 per cent increase in loan demand, resulting in an additional $2 billion to $3 billion in annual housing expenditure.
New and existing homeowners will also benefit from lower interest payments on their mortgages.
"The reduced interest rates will result in reduced income for the Trust amounting to approximately $540 million annually," Mr. Patterson stated.
During his contribution earlier this year to the 2005/2006 Budget Debate, Mr. Patterson said the Government would take funds from the NHT's coffers to fund the work of the Task Force on Education. It will take some $65 billion over 10 years to reform the sector.
Following the announcement, the Prime Minister came under fire mainly from the Opposition for seeking to set a precedent with NHT funds. But Mr. Patterson said yesterday the NHT had been called on in the past to help fund important state projects.
"This is not the first time the NHT has been making a contribution to education, but never one of this significance and one which is coming in the budget in this form," he said.
Mr. Patterson said the NHT has demonstrated exceptional performance in fulfilling its mandate to provide affordable housing solutions.
"The time has come not only to reap the benefits from the prudence with which the funds have been managed, but to look ahead as to how we mobilise savings for strategic interventions which foster national development."
He added that this move required a fundamental re-examination of the terms and structure of contributions and rates paid by employers, employees, and the self-employed, to deepen the resource base and expand opportunities for a wider range of beneficiaries.
Income bands
Income bands have been widened to now allow persons earning a higher weekly income to pay lower interest rates.
The bands and percentages are listed below:
Earning $5,000 weekly - 2 per cent
$5,501-$7,500 - 3 per cent
$7,501-$10,000 - 5 per cent
$10,001-$20,000 - 7 per cent
$20,000 and above - 8 per cent
For all existing bands, the corresponding interest rate will be reduced by two per cent for those who are already paying at two per cent and those earning more than $20,000 weekly will get a one per cent reduction.
