By Julian Richardson
Friday, August 28, 2009

Principal and executive chairman of Gore Developments, Phillip Gore, called on Government to double the National Housing Trust (NHT) loan ceiling to $7 million.

The NHT currently offers loans of up to $3.5 million at annual interest rates of between two and eight per cent to individuals who meet the repayment criteria with up to thirty years to repay. But Gore, in his contribution at a luncheon hosted by Observer chairman Gordon “Butch” Stewart at the newspaper’s Beechwood Avenue headquarters Tuesday, said the loan was insufficient to help the majority of individuals afford homes by themselves in today’s real estate market.

The NHT offers combined loans of $7 million to a maximum of two persons, and Gore reasoned that, in many instances, it is this facility which is utilised to purchase homes. The Gore Developments boss said a move to increase the individual loan ceiling would increase consumer purchasing power for homes, hence stimulating the construction sector and creating much-needed jobs in a country where the official unemployment rate was at a staggering 11.1 per cent as at January 2009.

“Apart from the tourism industry, I think the construction sector is one of the quickest ways to alleviate unemployment,” said Gore. “It’s a known fact; you can take people out of prison and put them on a (construction) site.

“In order for that to be stimulated, the NHT needs to double the amount of mortgage they offer,” he continued. “So, instead of two persons having to join together to buy a house, one person can do it.”

Gore also suggested that action be taken to induce building societies, which extend about 50 per cent of the mortgages in Jamaica, to reduce interest rates.

“Building societies’ interest rates are up in the 19 and 20 per cent while the NHT is down at two per cent; what they need to do is manage the two,” said Gore. “It goes back to the interest rates (argument) because what is going to induce our building societies to reduce their interest rates if they are competing for the same dollar with the other institutions – the BNS, the NCB etc?….It is something that needs to be worked on.”
Observer chairman Stewart supported Gore in bemoaning the high interest rates charged to Jamaicans who needed to borrow to purchase homes. He said, “In St Lucia, if an employee goes to the bank and proves that they work for a Sandals Resorts, for example, they get a loan for six and a half per cent…When you are talking about 14 and 15 per cent (in Jamaica). It’s suicidal.”

At the same luncheon, several private sector leaders urged the Government to move away from burdensome tax and interest rate policies in order to help stimulate export-led growth.