Minister of Finance, Dr. Ashni Singh made the announcement on Saturday. He said that Government has approved an increase in the ceiling on loans granted by approved mortgage finance companies for the purposes of low income housing and the new ceiling is $3M, a 50 percent increase on the previously applicable ceiling of $2 million.
The decision takes effect today and relates to loans granted under the low income housing programme that Government had established in 2001, the Government Information Agency (GINA) reported. Under the programme, participating licensed financial institutions that enter into an agreement with Government are mandated to allocate loans to finance housing development to individuals for the sole purpose of land purchase and home construction. The loans are required to be secured on the same house for which the loan is granted and the land on which it is built. The government grants certain specified incentives to licensed financial institutions participating in the programme, GINA explained.
The release said that Minister Singh indicated that since its introduction, the programme had demonstrated considerable success, with more than 1,300 low-income housing loans having been granted under the facility at a total value of $2.8 billion. This recent approval for the increased ceiling comes mere months after Government had also approved a 50 percent increase in the ceiling on housing loans granted by the New Building Society (NBS) from $8 million to $12 million, following which the NBS had lowered its lending interest rates, GINA noted.
The Finance Minister said that these interventions by Government are specifically designed to enable more Guyanese to be able to finance acquisition and construction of their own homes, recognizing the importance of home ownership to the quality of life enjoyed by citizens. He added that there continues to be a very visible construction boom in Guyana, particularly in the house construction sub-sector, reflecting a response to the Government’s “immensely successful” housing programme as well as its financial sector policies aimed at promoting access to financing for home ownership. Further, he added that the construction sector is an important provider of employment to thousands of Guyanese, and increased construction activity therefore has important job creation and growth implications for the economy as a whole.
In January the NBS had upped its loan ceiling and lowered its mortgage interest rates. Chairman of the Society Dr Nanda Gopaul had announced that the NBS’s maximum lending rate has increased from $8M to $12M, following government’s intervention. He had also announced that following approval from the Finance Ministry there has been a reduction in the mortgage rates. The mortgage rates have been reduced from 7.5% to 6.95% while for low incomes homes the interest rate is now 4.95% dropping from 5.5%.
