— as increased loan ceiling, economic conditions motivate decrease in interest rates

MOTIVATED by an increase in the loan ceiling for low-income earners and the general economic conditions, the New Building Society (NBS) has reduced its interest rates, placing aggregately $100 million per annum into the pockets of mortgage holders.
The NBS has, over the years, played a critical role in providing affordable financing to Guyanese to realise their dream of home ownership.
The bank’s ability to further contribute tangibly to the dream of many Guyanese was augmented when the government announced an increase in the mortgage ceiling for low-income loans. Senior Minister in the Office of the President with responsibility for Finance, Dr. Ashni Singh, in presenting Budget 2021 to the National Assembly, had announced a general increase from $10 million to $12 million in the ceiling for low-income loans. The ceiling at NBS, however, will be increased to $15 million.

This adjustment to the ceiling was formalised when the official approval letter was handed over by Dr. Singh to the bank, at the Arthur Chung Conference Centre, on Wednesday. In acknowledging the government’s adjustment to the loan ceiling, Chairman of NBS, Floyd McDonald said: “The New Building Society Limited wishes to place on record its pleasure to have its mortgage ceiling increased from $12 million to $15 million. The NBS has played and is playing a critical role in providing affordable financing to Guyanese to realise their dream of home ownership. It is in this context that we hail the increase in the mortgage ceiling and look forward to playing a more formidable role in the housing sector.” The bank, he said, recognises that the government will be engaging in active efforts to improve the nation’s housing stock, so the move to increase the ceiling is a welcome development which Guyanese are looking forward to.

In this regard, the NBS commits itself as an active partner to support the enhanced housing drive and to delivering finance to thousands of Guyanese, who will benefit from the government’s programme. The bank’s commitment, as said by McDonald, is justified by the reductions in mortgage interest, which will take effect from April 1, 2021. In outlining the specific reductions, the chairman said the interest on loans up to $6 million will be 4 per cent per annum instead of 4.25 per cent, while loans above $6 million to $12 million will attract an interest rate of 5.95 per cent compared to the previous 6.75 per cent. Additionally, loans above $12 million up to $15 million will attract 6.25 per cent interest per annum.

READY AND LOW-COST FINANCING
“The reduction in interest rates will aggregately put into the pockets of mortgage holders some $100M per annum. This is in keeping with our mandate to ensure that Guyanese can acquire ready and low-cost financing and, therefore, become home owners.
“The Society is indeed appreciative of the improved ceiling approved by the government. We know that our collective efforts will redound to an improved standard of living for Guyanese,” McDonald said.
Improving the standard of living, especially access to housing, has been a target of successive People’s Progressive Party/Civic (PPP/C) Governments over the years, Dr. Singh said.

Utilising data related to just NBS in order to defend his statement, the senior minister said when the PPP/C had assumed office in 1992, the interest rate charged by the bank, which was reflective of the broader economic conditions, was 18 per cent.
“As a result of the work we have done over time, we are pleased that we are at a point where people can borrow a loan at an interest rate as low as four per cent,” Dr. Singh reasoned.
In speaking further about the bank’s progression under successive PPP/C administrations, the senior minister said: “In 1991, the NBS gave 125 new loans, while in 2012 and 2013, the NBS issued 1,224 new loans and 896 new loans in 2014.”
His firm belief is that this “phenomenal growth” is predicated on the policy environment created by the PPP/C.

The new administration, he said, has already announced a menu of measures to create an improved policy environment which meshes well with the financial sector.
Other banks, while not increasing their ceiling to $15 million, are also participating in the government’s initiative under the general category, which includes an increase from $10 million to $12 million.
Collectively, the interventions in the financial sector and other measures form part of the government’s plan to facilitate home ownership.
Having already distributed 3,800 house lots so far, the government, through the Ministry of Housing and Water, will be looking to achieve a target of 10,000 distributions by the end of this year.
Minister of Housing and Water, Colin Croal, advised NBS that based on the government’s target, the bank should be expecting 8,000 potential mortgagers within the next six months. Measures such as the zero-rating of construction materials have already been instituted to motivate greater home ownership.
With a solid foundation in place, the government, he said, will be able to move with some level of alacrity to reach their primary goal of making 50,000 allocations within five years.