The House of Representatives, on Tuesday, November 11, passed amendments to the Mortgage Insurance Act, aimed at making mortgages more accessible for persons seeking to acquire a home.
The Bill seeks to increase from 90 per cent to 97 per cent, the percentage of the appraised value of the property on which mortgage indemnity insurance is granted; and to vary the percentage of the appraised value by way of Ministerial Order, subject to affirmative resolution.
A prospective purchaser will be required to find three per cent of the price of the house as down payment, plus an estimated two per cent closing cost for an overall equity input of five per cent, exclusive of the relevant duties.
“This is in comparison to current down payment requirement of 10 to 15 per cent plus closing cost of two per cent, which is out of the reach of most Jamaicans,” said Minister with responsibility for Housing, Hon. Dr. Morais Guy.
He noted that the amendment will have “an enormous and profound effect on the housing sector in the country”, as well as the ability for individuals to own a home.
“This is part of the administration’s deliberate efforts to make access to home ownership more realizable,” he said.
The Mortgage Insurance Act was last amended in 2008. That amendment facilitated the writing of more mortgage insurance policies, by increasing the amount of insurance that could be issued by the Jamaica Mortgage Bank (JMB) from $1.2 billion to $2 billion.
Dr. Guy noted, however, that the insurance fund is underutilized and it is the view of the bank that the amendment to the percentage sum that can be insured will increase the use of the product and make mortgages more accessible to the average Jamaican trying to acquire a home.
“The Jamaica Mortgage Bank estimates that this will result in an increase of the policy insured by 15 to 20 per cent,” the Minister said.
He informed that the maximum 97 per cent will only be applied and allowed in particular circumstances and as such “the bank wishes to have the flexibility to examine each application on a case by case basis.”
He noted further that the amount loaned and insured will be based on the assessed risk of the borrower to ensure that there is no increased risk to the fund.
Opposition Spokesperson on Finance, Audley Shaw, welcomed the amendments noting that it will encourage more home ownership.
By Latonya Linton