Growth in mortgages comes with adequate infrastructure -NBS director
Record $2.4B disbursed in 2002
Stabroek News
January 18, 2003
The New Building Society (NBS) disbursed a record $2.4B in mortgages in 2002 but Maurice Arjoon, Director/Secretary, says this could be much more if new housing schemes had proper infrastructure.
He contended that there was no lack of enthusiasm on the society's part to foster home ownership in Guyana.
The government in a recent advertisement appearing in the newspapers, seeking support for the US$25M Inter-American Development Bank (IDB)-funded Low Income Settlement Programme (LISP), said there was a lack of enthusiasm and competition among mortgage lenders.
"The government of Guyana's response to present day public pressure for home ownership has been severely hindered by a lack of enthusiasm and competition among mortgage lenders for low/moderate income household business," the Central Housing and Planning Authority said in the ad.
The Authority, which is a unit within the Ministry of Water and Housing, says the lack of competition has resulted in the low/moderate income residential development process being "extraordinarily slow".
The ad was to solicit the services of a mortgage access credit consultant as part of LISP to advise on access to credit; to provide technical assistance and effect the transfer of the best regional mortgage processes; to generate enthusiasm as well as "persuade competition" among mortgage lenders for low/moderate income household businesses; and to facilitate strategies for low/moderate income mortgage risk reduction in Guyana.
Asked to comment on the assertions in the advertisement, Arjoon said the NBS was doing all that it could to promote home ownership to the extent of subsidising its interest rates by an average of 2%.
NBS offers mortgages at rates of 8% per annum for persons earning under $60,000 per month. The maximum under this category is $1.5M. Mortgages are available up to $8M at 9.95% per annum once certain conditions are satisfied. On the other hand, it offers interest rates between 3.5%- 6% to depositors and currently holds $19B in deposits.
Arjoon said since the low income mortgage scheme was established by the Society, it has approved just under 200 low income mortgages.
"We go all out for low income persons," Arjoon said. However, he noted that execution of a mortgage is a process which does not depend on the society alone. He said the application process takes a week or two but to get the security in order - which is out of the NBS' hands - can take between six to eight weeks. He said there are other problems as well which affect the housing drive. These include the lack of infrastructure in housing schemes which can deter land owners from wanting to build. Arjoon said the society would like to do more but faces inhibiting factors. The NBS would not encourage construction of homes in schemes where proper infrastructure (electricity, roads and water) is not in place as it devalues the security.
In 2002, the NBS' mortgage portfolio increased by 18%, moving from $8.3B at the end of 2001 to $9.8B at the end of 2002. Mortgage lending takes up about half of the society's business. In 2002, the society executed about 230 mortgages, moving from 700 at the end of 2001 to 920 at the end of 2002. (Gitanjali Singh)
