More than 90 Bermudians sign up for government-backed cheap mortgage scheme
More than 90 people have signed up to a government programme to help them become homeowners since it was launched last month.
Under the scheme, 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 halved to 10 per cent.
Speaking in the House of Assembly yesterday morning, David Burt said that the initiative, launched in partnership with the Bermuda Commercial Bank, was the first of a three-step process to reduce mortgage rates.
Currently, only first-time buyers under the age of 40, who bank with BCB can qualify, but the programme will be expanded to include the refinancing of existing mortgages held with other financial institutions.
The Premier said: “When assessing the current status of the housing market and after listening to hard-working Bermudians express their frustrations as their dream of owning a piece of the rock becomes increasingly difficult due to high interest rates and down payment requirements, it was incumbent for this government to act.
“The programme is limited to a $50 million aggregate guarantee. It represents a first step in the process of lowering mortgage rates in Bermuda, as the Government continues to advance a broader scope initiative, which will look to reduce mortgage rates across all major local banks.
“This was not an easy decision, but we proceeded with this programme as it was deemed necessary and important for a better future for Bermuda and its people.
“Since launching this programme I’ve heard many young Bermudians and parents of young Bermudians who have expressed their appreciation for this initiative which confirmed to me, and this government, that this was the right decision.”
Mr Burt said that the scheme would guarantee any deficiency judgment which would be outstanding after the bank properly exercises its power of sale, with the amount payable capped at $250,00 per borrowing.
“This approach helps to mitigate the Government’s risk,” he said.
“It is also important to note that the Government guarantee will not be in place for the entire term of the mortgage. As each loan is unique, the time period when the guarantee will fall away can differ.
“However, under the agreement the duration of the guarantee for any loan cannot exceed ten years. This process will allow the Government to then apply the guarantee in support of additional borrowers.
“This Government is currently in discussions with the international business community, particularly those with experience in providing coverage for mortgages overseas, to establish possible terms to cover a portion of the exposed risk.
“The economy will benefit from a growing number of Bermudians owning homes in Bermuda and receiving this government’s tangible support will make that a reality.”