IN an effort to significantly increase the supply of new housing and service lots, Prime Minister Andrew Holness says that the National Housing Trust (NHT ) has been reviewing financing options that would substantially increase the amount of funding available for new housing construction.

“The NHT has developed a new financing and product delivery framework,” Holness said in his contribution to the annual budget debate in the House of Representatives on Thursday.

The prime minister said that the new framework is an arrangement with partner mortgage lending institutions, regulated by the Bank of Jamaica (BOJ), to fund the full mortgage disbursements to NHT contributors, including NHT mortgage benefits, up to $6.5 million. The disbursement, including the NHT portion, will be fully financed by the partner institution.

He said that this will relieve the NHT of providing the cash required to fund the principal amount of the mortgage upfront as this will be funded by the partner institution.

The NHT, said Holness, will then pay directly to the institution the difference between the interest rate charged by the institution, and the interest rate charged by the Trust.

“This will relieve the NHT of the cash required to fund the principal amount of the mortgage upfront, as this will be funded by the partner institution,” Holness said. He added that the NHT will have an ongoing obligation to fund the interest rate subsidy between the mortgage lending rate of the partner institution and the NHT rate.

“It is important to note that the mortgagor will not be negatively impacted as the interest payment will be exactly the same as if the funds were accessed directly from the NHT,” he said.

For illustration, he explained that a mortgagor seeking financing of $10 million would access the entire amount from their chosen institution. However, the mortgagor will pay interest on $6.5 million at their applicable NHT rate, for instance, four per cent, and at the normal rate for the partner institution on the remaining $3.5 million, say 7 per cent. The NHT will pay the partner institution the shortfall between the NHT’s rate and the PI’s rate (3 per cent in this case) on the $6.5 million.

He said that the Government had instructed the NHT that, in its current housing developments, it must focus on housing solutions that will come into the market at between $8 million and $11 million.

“Someone purchasing a house today for $8 million would be paying, on average, $29,800 per month for a mortgage. This is still high, but not unreasonable, and it is an improvement as the average price range previously was $11 million to $15 million or higher, which would see a monthly mortgage of $39,500 for the lower end of the range,” the Prime Minister told the House.

“The only way to bring the cost of housing down is for the government to subsidise the unit. Currently the government does full subsidy on social housing programmes that are targeted to indigent beneficiaries,” Holness said.

He added that the Housing Agency of Jamaica (HAJ) and the NHT invariably subsidise their development projects by absorbing planning and approval costs, land acquisition costs, and sometimes, infrastructure costs.

He also announced that effective July 1, 2022, the NHT will revise its policy on subsidies in an effort to ensure that they are applied to those who are most in need. Income will be the sole determinant of whether a subsidy is applied.

The disability grant was introduced in July 2017. Under the programme, NHT mortgagors with disabilities or who reside with and care for a family member with disabilities are eligible for a grant of up to $150,000 to be used to retrofit or upgrade the dwelling to make it suitable to serve their needs.

Effective July 1, 2022, the NHT will double the Disability Grant benefit and allocate up to $300,000 per individual up to a maximum of two persons living with disabilities per household.

The NHT will also allow up to three contributors to apply for a two-bedroom or larger unit to better improve affordability.

Holness said that this policy position ensures that more people, particularly family members, can access housing. A key provision of this policy is that proof must be established that the applicants are bona fide family members and have demonstrable kinship ties.