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NHT relief - Sweetener for new borrowers, 100,000 mortgagors to benefit from rate cut

Published:Friday | March 20, 2020 | 12:28 AMEdmond Campbell/Senior Parliamentary Reporter
Prime Minister Andrew Holness addressing parliamentarians during his Budget Debate presentation in the House of Representatives in Kingston on Thursday.
Prime Minister Andrew Holness addressing parliamentarians during his Budget Debate presentation in the House of Representatives in Kingston on Thursday.

With the COVID-19 pandemic turning its screws on the Jamaican economy, Prime Minister Andrew Holness yesterday announced a stimulus package to reduce interest rates by one percentage point to new National Housing Trust (NHT) borrowers while offering existing mortgagors a 0.5 per cent rate cut.

The reduction in interest rate for existing mortgagors will benefit 100,000 persons.

Additionally, the Development Bank of Jamaica (DBJ) is seeking to shore up the business process outsourcing (BPO) sector by offering players a moratorium on loans for two months on both principal and interest.

In his contribution to the Budget Debate in Parliament yesterday, Holness also said that the DBJ would slash interest rates on existing loans to the agriculture and renewable- energy sectors by 0.75 per cent for the next two months.

The DBJ will also offer $10 billion for on-lending to the agriculture sector through accredited financial institutions. These institutions, according to Holness, have an obligation to pass on the 0.75 per cent cut in interest rate to borrowers.

Three-month moratorium

Giving details on the benefits to NHT mortgagors, the prime minister said that the Trust would introduce measures to safeguard people from losing their homes while increasing their disposable income.

He said that the NHT has put in place special relief for mortgagors who have lost their jobs owing to the COVID-19 pandemic.

Effective immediately, mortgagors who are laid off can apply for a moratorium on loan payment for three months in the first instance.

Last month, 11,350 mortgage accounts valued at $18.3 billion at the NHT were in arrears for 90 days and over.

“Based on the NHT’s loan-management procedures, recovery activity, including public auctions, were implemented. Effectively immediately, the NHT will provide an option to reschedule these delinquent loans. However, this option will only be made available if the Trust has not already entered into a commitment to dispose of the property,” Holness explained.

“Mortgagors are also encouraged to take advantage of this opportunity, which will be extended for six months, effective April 1, 2020. During this period, the NHT will consider each mortgage on a case-by-case basis, with the option to extend the tenure of the loan, reduce the interest rate, or some combination thereof,” the prime minister said.

Holness said the special interest rate currently offered to groups such as persons over 55 years, the disabled, and public-sector workers would continue.

“The interest rate discount for the disabled, effective April 1, 2020, will be extended to include the parents of disabled children,” the prime minister said.

There will also be housing benefits for persons over 65 years who are voluntary contributors.