THE National Housing Trust (NHT) yesterday announced that it will make available $1 billion for building societies to on-lend, at preferential interest, to people whose homes were damaged by Hurricane Ivan a fortnight ago.

“This amount really is to supplement receipts from insurance claims and other sources of rebuilding,” the Trust’s chairman Kingsley Thomas told reporters at a press conference in Kingston.

The allocation is in addition to the three-month moratorium on payments that the 55,000 NHT direct borrowers were granted on Tuesday, announced in Parliament by Prime Minister P J Patterson.

The prime minister had announced the special loan initiative through the building societies, but did not say how much would be allocated.

Patterson had also announced that the NHT would commit up to $400 million for post-hurricane home reconstruction, to be managed by the Office of National Reconstruction (ONR), the agency established to oversee Jamaica’s recovery effort.

Thomas said loans from the cash to be channelled through the building societies will be limited to $250,000 per borrower, to be paid back at a rate of seven per cent over 10 years.

That interest is substantially lower than existing building society rates and even below the top rate of nine per cent that the NHT offers its borrowers with the highest incomes.

The NHT, established in the 1970s, is charged with driving shelter development in Jamaica and is funded by a payroll tax levied on workers and employers.

Employees pay a three per cent tax, which is refundable after seven years, which is matched by a non-refundable contribution by employers. The NHT has assets of over $62 billion.

Individuals can borrow up to $1 million to purchase homes in private schemes or in NHT-financed developments. Two persons can jointly borrow $2 million. The Trust’s mortgage rates range between two and nine per cent, depending on the income of borrowers.

NHT loans, however, are usually insufficient to fully finance a home so its funds are usually “mixed” with higher rate money from the mortgage companies.

Building societies charge best customers between 18 and 19 per cent on residential mortgages, but some have announced special, softer facilities, to help finance post-hurricane reconstruction.

Thomas said his scheme was incremental to each organisation’s in-house initiative.

All loan applications, he said, must be made before December 31 and each borrower will receive a three-month grace period before repayment begins.

If the NHT’s offer is fully subscribed and each borrower receives the maximum amount, 4,000 persons would benefit from the scheme.

In his parliamentary announcement on Tuesday, Patterson had said that the NHT’s moratorium on mortgage payments was aimed at providing a measure of relief to homeowners who may have suffered damage from the hurricane or may have had higher expenses to prepare for the storm or to clean up afterwards.

The effect of this initiative will be to leave in the pockets of the average NHT borrower about $7,000 a month over the three months of the moratorium. The upshot is that consumers will have an extra $1.2 billion with which to buy goods and services.

Thomas, however, stressed yesterday that the NHT’s post-hurricane initiatives would not impair the agency’s ability to deliver its regular housing programmes.