A $50 million pilot initiative aimed at helping first-time buyers to get on the property ladder was launched today by the Premier, David Burt.

Under the move, first-time mortgages will be guaranteed partially for up to a decade by the Government, with interest rates as low as 5 per cent and down payments slashed to 10 per cent.

The initial stage of the project, which is in partnership with the Bermuda Commercial Bank, should aid 250 Bermudians, Mr Burt said.

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Mr Burt said that the move would lead to approximate monthly savings of $500 a month on a $500,000 mortgage, and $650 a month on a $750,000 home loan.

The Premier added: “The Government’s support reduces the risk to the bank, and in return for the reduced risks the bank will offer to approved applicants a reduced interest rate starting at 5 per cent, and also reduce the standard down payment from 20 per cent to 10 per cent.

“While this is a pilot programme with limited capacity, it is estimated to benefit 250 Bermudians.

“The Government is advancing a broader scope initiative which will look to reduce mortgage rates at our other major local banks.”

Mr Burt said the scheme would involve three phases.

“The pilot programme will be limited to a $50 million aggregate guarantee and the eligible borrowers will be rolled out in three phases,” he said.

“The first phase will be for first-time home buyers.

“The second and third phases are being fine-tuned and will be the subject of further announcements.

“Our goal is to extend this programme to include those with existing mortgages interested in transferring them over and participating in a programme with reduced interest rates.”

Mr Burt insisted that the Government would not get involved in the relationship between borrowers and the bank.

He said: “The approval process and the relationship throughout the entirety of the loan will be between the borrower and the bank.

“The Government will have no involvement nor influence with any decision made by the bank.

“It is also important to note that the government guarantee will not be in place for the entire term of the mortgage.

“The government guarantee will remain in place for a minimum of five years, and it is anticipated on a normalised basis to be in place between five and ten years.

“In terms of saving under this pilot programme, on a new $500,000 mortgage the borrower will save approximately $500 a month. And a new $750,000 mortgage will save approximately $650 a month.”

On reduced down payments, Mr Burt said: “The saving that will come in that respect is that instead of someone having to borrow or save $100,000, they only have to save $50,000 in a down payment.”

Mr Burt added: “One of the things we are doing to ensure we do risk management on this as well … when we talk about how we are going to expand this programme, one of things is that Bermuda is home to some of the largest mortgage insurers on the planet.

“We are going to engage the international business community to ensure that they can work with the wider banking community as a way to lower interest rates.”

Asked if he was following in the footsteps of former British Prime Minister Margaret Thatcher, who said she wanted to create a “home-owning democracy”, Mr Burt said: “I am following the footsteps of what has been laid out by the Progressive Labour Party election manifesto, which comes from the members of this party.

“And when we say we are going to create an ownership society, I listen to the feedback.

“What we want to ensure is that more Bermudians have access to owning a home.

“It is difficult, especially with the cost of living in Bermuda, to save the funds which are required.”

Mr Burt said discussions were being held with the Bermuda Credit Union about creating a similar scheme.

Neville Grant, of the Bermuda Commercial Bank, said the pilot was up and running, stating: “It is up on our website and it’s ready to receive applicants.”