Dear Editor,
It came to my attention recently that acquiring a mortgage in Guyana is not as easy as has been advertised. One bank especially discourages would-be applicants with what they claim to be rules set in motion by the Bank of Guyana. The individual with whom I spoke after he sought a mortgage said he was informed that he could not get it because the loan is usually covered by life insurance, and insurance houses in Guyana would not give him a contract because of the fact he was retired. Being a longstanding member of the bank, he was then offered a commercial loan which has no age requirement, but at 13% annual interest his monthly payments were then projected to be in the sum of $115,000.00 on an $8 million loan over ten years. And this was not the bottom line. He was informed that the qualifying requirement for the loan they suggested with the hefty interest rate was that the applicant had to have a monthly income that was in the neighbourhood of three times the amount of his monthly payments, on account of statutory banking stipulations which were encased in a rigid grid. And therein dwells the culprit in the established sphere of banking and lending in this country.
The man had convinced me that making the monthly payments would have been neither a hardship nor a problem for him, as his bank gets their hands on his foreign incoming monies much before he does (and which come from a US government pension by way of direct deposit). Now, who, and how many individuals in Guyana would have an income that is in the area of $345,000.00 monthly? And such income-supported persons would need no mortgage, as they could easily build an $8million home in two years without the assistance of a lending house. Clearly, the banks in Guyana are catering to a limited few, and certainly not to the many that are purchasing land from the government for the building of homes.
The individual also stated that the bank had previously purchased the land for him by way of a commercial loan at 18% interest, so they should have expected he would be building on the acquired land and would have needed a loan from them to continue. He had never missed a payment which would have constituted a default, he said, so should that not have earned him a good credit rating? Should the bank not make an exception of his application, knowing his proposed monthly payments on a loan to be secure?
Every business institution must make allowances for the bending of grids that may arise on their safety factors, and be ready and able to withstand them. Where bias definitely can be found is on matters to do with the elderly. No society of a healthy mind would want to discard the elderly or turn its back on them. After all, the elderly are the ones who are capable of assisting the youths via a storehouse of experience. The elderly still have to be housed and fed. Another bank, I was told, wanted the applicant to open a savings account with them and deposit matching funds to the extent of the loan so as to qualify. Where then is this proposed plan for all Guyanese to build their own homes and discontinue the custom of being tenants? Should not these banks take the submitted circumstances in hand and work with their customers on an individual basis, instead of rigidly adhering to a book of preset laws which are then applied to every applicant? The individual said the loan officer was quick to expound on the fact that when the mighty US of A and other countries of the world were suffering bank failures and foreclosures on mortgage loans due to falling economies, the banks in Guyana did not because of Guyana’s rigid principles of lending. Guyana should be proud of avoiding banking failures, but should not use the procedures employed as a rigid benchmark. I ask, how many are successful in acquiring loans for the building of their homes, if there is no bending of the mandated rules? Rules should be bent or amended when new policies are introduced. I am confident of having heard of talk in which the government suggested to lending houses that they should ease and amend previous mandates for those wanting to build homes on land purchased from the government.
The new policies of the Government of Guyana when they allowed the people of Guyana to own land were not implemented so that they would sit in the open air on the acquired lands, but so that they would be given the opportunity of building homes of their own. Should not then the banking rules of yesteryear be amended to keep pace with the new trends? The individual claimed that the bank also said that they pondered the fact he may not be capable of buying food, clothing and other amenities if he had to pay his monthly mortgage which was easily accessible (another clause from the book of rules). Really! Should this be their concern? The man is a progressive man – he showed me a kitchen garden he has already planted on his land and firmly believes the single area with which the banks should concern themselves was the repayment of his loan.
And again to do with the elderly, especially here in Guyana where one is so addressed when he reaches 50 years of age, anyone in other countries of the world can acquire life insurance regardless of age, some, even if they are ill. In the United States the AARP sees to this. And anyone can acquire a mortgage if they can prove they can make payments. How they live after making their mortgage payment is solely their own business. I therefore ask the Government of Guyana to amend and remove all extraneous difficulties and discouragements when someone wants a loan from a lending house to build a home. By so doing, every man in the land will be allowed a fair opportunity to grow further. Already I see advertisements every day on television where the Commander in Chief himself states that every Guyanese should be allowed to grow in this land regardless of ethnicity, religion, public standing, and age. Are the banking institutions listening to the leader?
Yours faithfully,
Jorge Bowenforbes
