Prime Minister Andrew Holness has announced increased benefits for National Housing Trust (NHT) contributors. The Prime Minister provided details during his Budget Presentation Tuesday afternoon.
He says the Government will undertake measures to increase the supply of housing while broadening access to financing for the purchase of housing. The Government will therefore increase the income band to access NHT loans at a rate of 0% from $7,500 to $12,000 per week.
Based on calculations of the National Housing Trust, those individuals would be qualified to borrow up to approximately $4.89 million.
Two contributors of similar income levels, below $12,000 per week, can now jointly afford a mortgage of $9.8 million.
Contributors now earning between $12,001 and $20,000 per week will now be eligible for a 2% mortgage interest rate, down from 4%; and persons now earning between $20,000 and $30,000 weekly will be eligible for loans at 4%, down from 6%.
Those contributors who earn above $30,000 weekly will continue to pay at the highest interest rate of 6%. These adjustments will take effect for mortgages written after July 1.
The prevailing 2% interest rate discount for the disabled and senior citizens, as well as the 1% reduction for public sector workers will continue to apply.
Mr. Holness says the policy change will positively impact more than 70% of prospective mortgagors, significantly increasing the amounts that they can afford to borrow.
The change will cost the NHT $1.58 billion dollars in interest revenue over the four year period 2016/17 to 2019/20.
Subsidies and Home Grants
And adjustments are to be made to NHT subsidies and home grants. The National Housing Trust introduced the Home Grants programme in July 2010 as a facility to help lower income contributors afford a home of their own.
Under the programme, contributors who earn a maximum of $10,000 weekly can currently apply for a grant of up to $1.2 million to augment the amounts that they can afford to borrow from the NHT, up to a maximum of $3.6 million. The funds can then be used to finance the purchase or construct a unit.
The adjustments to the income bands will not impact the affordability levels of persons at or near minimum wage.
The Government will adjust the current Home Grant policy as follows:
The combined ceiling for mortgage loans and Home Grant will be capped at $4 million per contributor.
As such, persons earning $12,000 or less weekly, as well as senior citizens and the disabled, will be eligible for the Home Grant which is to be capped at $1.5 million. Currently, individuals must contribute to the NHT for a minimum of 10 years in order to access a home grant.
In addition, the Government, will reduce the eligibility period, to be in line with the period over which contributions refund become due - that is, seven years.
An individual can now access the Home Grant in the eighth year of contributing to the Housing Trust. This will also take effect on July 1.
The adjustment is set to allow every NHT contributor to afford at minimum, a studio unit, having contributed for seven full years. This proposal is expected to cost the NHT $3.2 billion over the next three years.
In response to current market conditions, the National Housing Trust proposes to increase the loan limit from $1.5 million to $2 million for house lot loans, effective July 1.
This means that two contributors may access up to $4 million dollars jointly for purchase of land on the open market and a further $7 million dollars for construction of a housing unit on the same lot, subject to affordability.
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