Mr. Wynter told JIS News that a letter has been sent to inform Minister without Portfolio in the Ministry of Economic Growth and Job Creation with responsibility for Water, Works and Housing, Hon. Karl Samuda, of the four changes to the MII plan.
The changes will bring about the removal of the appraised value limit on residential mortgages that can be insured under the MII plan. The previous appraised value limit under the MII was $30 million.
The JMB will also commence insuring commercial properties under the MII plan to a maximum value of $100 million. This value was thought appropriate by the JMB after a risk analysis was done.
With the new changes under the MII plan, customers will enjoy a reduction in premium rates charged for residential mortgages with Total Debt Service Ratios (TDSR) of less than 40 per cent from seven per cent to five per cent, based on the low risk involved.
The premium rates for residential mortgages with TDSR greater than 40 per cent will also be reduced from seven per cent to five and a half per cent. This translates to a reduction in the closing costs customers will have to pay.
Bank fees under the MII will also be reduced by 40 per cent, resulting in customers now paying $1,000 instead of $2,500.
“We as the administrators for the mortgage insurance for the Government have taken the Board-approved decision coming out of the actuarial review to take on some of the recommendations made by the actuaries,” Mr. Wynter told JIS News.
He shared that the reductions are geared at stimulating usage of the MII plan by citizens.
“We think that by reducing this burden of the costs of purchaser through this mortgage insurance plan, this will stimulate utilisation of the MII plan. The mortgage insurance, when it was conceived, was designed to help primarily low-income earners, so we had a limit on the appraised values of homes which were affordable to low-income earners,” Mr. Wynter said.
He pointed out that, over time, the prices for houses have escalated and, therefore, the JMB has decided to remove the appraised value limit on residential homes.
“Not long ago financial institutions were only lending up to 90 per cent, and what we found was that the deposit of 10 per cent became very onerous and burdensome to young professionals and low-income earners,” Mr. Wynter said.
He explained that what the mortgage insurance sought to do since it came into existence 50 years ago, is to liaise with approved lenders to provide up to 97 per cent mortgage financing, as the JMB insures the additional seven per cent for the purchaser. This results in the purchaser only needing an initial deposit of three per cent to acquire a mortgage from an approved lender.
“We are now implementing this with our approved lenders, the commercial banks and credit unions, to pass these reductions on to their borrowers, and we hope that this will be a move to stimulate utilisation of the mortgage indemnity plan,” Mr. Wynter said.
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