Susan Gordon, Business Reporter

The National Housing Trust (NHT) said it has paid out close to $1billion in refunds in the first six months of this year, but had it not been for the strong lobby from beneficiaries, most mortgagors would not have seen a change on their loan balances.

The NHT changed its procedure in January to allow contribution refunds to be posted directly to the principal balance of mortgages.

Posting refunds

In the past, refunds were posted to mortgage accounts as regular payments. This means a larger portion of the refund was put towards the interest payable on the loan. Customers are now able to also better track their balances through NHT's bi-annual statements.

Considering that a mortgagor spends at least the first 10 years in the life of the mortgage paying off the interest, the practice of putting the larger portion of the refund to the interest meant contributors saw little adjustment on their principal payment.

"Refunds are to be posted directly to the principal balance, except for accounts in arrears, where the refund payment is posted as a regular payment," said Mitzie Davison-Jobson, acting manager of NHT's Contribution Refunds Department.

She explained that this would be the case, whether or not the mortgagor had applied for the refunds.

The trust allocates regular mortgage payments in a similar manner.

The NHT said just over $900 million in regular and special contributions refund was paid out to just under 60,000 contributors. The NHT is now refunding contributions made to the trust up to 1999.