But middle income purchasers who need to access additional funds from building societies - the private side of the mortgage market - are still faced with prohibitive monthly payments.

Processing the loan, however, is easier under the new system of mortgage partnerships, an arrangement between the NHT and private lenders, which allows the purchaser to transact business with a building society only, reducing paperwork and turnaround time for dual loan applications.

"Under the joint finance mortgage programme, you don't have to go to the NHT at all. You apply and everything is processed here. We are actually agents for the trust," said Victoria Mutual Building Society's (VMBS) Gary Lowe.

The new NHT benefits, announced in July, will see an increase in the loan limit for non-homeowners from $1 million to $1.5 million for single applicants, and from $2 million to $3 million for co-applicants for home purchases.

Contributors to the trust will now access mortgages within a range of two to eight per cent, down from a high of nine per cent.
And NHT has also revised the income bands used as the guideline for determining what interest rate to charge per applicant.

"Under the new income band/interest rate structure, qualified contributors earning up to $20,000 per week will now receive their loans at seven per cent," the NHT has said.
Formerly, applicants earning over $10,000 repaid their loans at the maximum nine per cent.

The adjustment will also allow persons in the lower income streams to qualify more easily for the maximum loan amount.

"It is estimated that as a result of the changes, persons with gross incomes as low as $4,800 per week will now be able to afford the maximum loan of $1.5 million, assuming a 30-year repayment period," said a NHT release.

The current cost of real estate dictates that middle income purchasers seeking houses upwards of $5 million will still have to combine their NHT benefits with the higher cost funds from building societies.
But even with the special interest rates for first-time home buyers at all the building societies, footing a monthly mortgage could prove highly restrictive.

At FirstCaribbean Building Society (FCBS), first-time home owners receive a rate of 13.5 per cent, currently the lowest on the market, compared to VMBS' rate of 13.95 per cent and Jamaica National Building Society's (JNBS) offer of 14 per cent rate.
However, in some cases these interest rates move upwards as the house price exceeds a set dollar value.

Lenworth Tracey, FCBS manager, explained that a house costing $6 million - with NHT joint financing and assuming a five per cent downpayment - would have a purchaser repaying approximately $58,500 per month for a 20-year mortgage.

If the house exceeds $6 million, then the additional cost is calculated at 15.75 per cent, Tracey said.

So, a house costing $7 million, for example, would have the first $3 million lent at the NHT rate, the second $3 million financed at the building society rate of 13.5 per cent, and the balance (less deposit) lent at 15.75 per cent, he said.

There is a cash-back component, which makes the FCBS effective rate 13 per cent, Tracey said.
But this saving is just that - a saving - and cannot be used to finance any part of the purchase.

"It goes into a savings account and has to stay there for at least three years," he said.
At VMBS, with the same $6 million house, a first-time home purchaser who makes a 10 per cent deposit should expect to repay at 13.5 per cent, which translates to approximately $54,800 per month for a 20-year mortgage.

JNBS, with the highest interest rate on the $6 million home purchase, reported an approximate $70,600 per month mortgage for a 25-year loan. Its monthly figure includes an optional life insurance of approximately $3,000 and compulsory savings of $5,000.

With a typical debt service ratio of three to one, the mortgage institutions require prospective home purchasers to earn about three times the calculated monthly mortgage to qualify them for a loan.

In the case of JNBS, the applicant wanting to purchase a $6 million house would have to be earning about $210,000 per month.
Persons may opt to build their own homes as an alternative to purchasing a ready unit.

For such persons, the NHT has also increased the nominal loan amount available for its land lots, from $450,000 to $600,000 for single applicants and from $700,000 to $800,000 for co-applicants.
Homeowners or home improvement loans also move from $400,000 to $600,000 for single applicants and up to $800,000 for co-applicants.

Though, the new interest rate structure takes effect tomorrow and will be applicable to all 55,000 persons on its mortgage roll as well as any new applicants, the trust has warned that those on the existing roll to be affected by the change may not know immediately what new payment terms are on offer to them.

Such persons, it said, will be advised of their new monthly obligations as soon as the adjustments are made.