JAMAICA | PNP Concerned About New Arrangements for National Housing Trust (NHT) Contributors

Kingston, Jamaica. August 16, 2023: The Opposition PNP says it  is extremely concerned about the new arrangement that has been put in place by the Government for contributors to the NHT to access mortgage financing. Under the new arrangement, all contributors earning over $31,000.00 per week who are seeking to get a mortgage, must go to a private sector financial institution to apply for their loan. 

According to the Opposition Spokesperson on Housing and Sustainable Living, Senator Dr. Floyd Morris, the PNP is troubled by the situation. “We are uneasy about this development because we know that the primary focus of banks and other private sector financial institutions is primarily profit-driven. In contrast, the central goal of the NHT is to provide affordable housing for its contributors. Therefore, we are highly apprehensive that this new arrangement is going to be disadvantageous to the contributors of the NHT.”

Senator Morris is troubled about the high-quality service that has been associated with the NHT over the years being eliminated with this new arrangement with the commercial banks. “Over the years, the NHT has built up a reputation as a solid and efficient governmental institution in service delivery to its clients. Because of this, it has won several public sector awards for its prodigious service to the contributors. We do not believe that the contributors of the NHT will be exposed to such high quality and dedicated service under the new arrangement.”

Dr. Morris is also expressing concern about the employment status of workers with the NHT. He opined: “With this new arrangement, it suggests that a significant portion of the core operations of the NHT will be conducted by operatives in the private financial market. It means that there will be less workers needed at the NHT. Will we be seeing a mass reduction of staff at the NHT?”

Senator Morris is calling upon the Government to explain to the country how this arrangement is likely to benefit the contributors to the NHT and the NHT as an institution. Will the new arrangement result in cheaper homes for contributors? Will NHT be making greater surplus because of this arrangement?

At the heart of these concerns is also the negative impact on the financial viability of the NHT, as the new arrangement involves the NHT incurring the cost of providing a massive subsidy to the banks on these mortgage loans.

“Currently, the NHT charges contributors up to 5% per annum on mortgages. With the new regime, the NHT will be required to pay the banks a subsidy for the entire duration of each mortgage loan. That subsidy is equal to the amount by which the banks’ commercial interest rates (capped for this purpose at 1% above the BOJ policy rate, or presently 8% per annum) exceed the NHT’s rate.

“The subsidy will have profound implications for the financial solvency of the NHT, as with every new mortgage loan by the banks, the NHT will be incurring a subsidy expense rather than generating an income-earning asset. And over time, as the NHT‘s existing portfolio of loans is paid off and NHT financing is replaced by these bank mortgages loans, the subsidy that the NHT has to pay to the banks will continue to grow,” says Senator Morris.

According to Senator Morris: “What’s more, this policy shift is being implemented at a time when the Government is still taking $11.4 billion each year from the Trust for budgetary support, and will do so until March 2026, even though Jamaica has long ceased being under an International Monetary Fund (IMF) agreement. This budgetary support should have ended back in 2017, and that would have given the NHT significant resources to assist contributors with more affordable housing.”

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