The Tribune

By Fay Simmons

Tribune Business Reporter

jsimmons@tribunemedia.net

A credit union yesterday agreed to supply a $25m financing package that will cover around 100 mortgages for purchasers of affordable government homes.

The Department of Housing signed a Memorandum of Understanding (MOU) for the funding, which will go directly to borrowers/homeowners, with the Teachers and Salaried Workers Co-operative Credit Union (TSWCCU). The latter said the financing is targeted at "Bahamian blue collar workers".

Byron Miller, the credit union's general manager, said:”The Teachers and Salaried Workers Co-operative Credit Union... is delighted to partner with the Government of the Bahamas through the Ministry of Transport and Housing as we launch our new mortgage financing programme specifically designed for Bahamian blue collar workers

”We are pleased to announce that the Board of Directors of the Teachers and Salaried Workers Co-operative Credit Union has approved a disbursement financing package of $25m for this particular initiative” Jobeth Coleby-Davis, Minister of transport and housing, said the mortgage financing will be released directly to qualifying homeowners and not pass through the ministry.

She said: "Let's just be clear. The $25m is assigned for mortgages. So there will be no cash transaction between the Ministry of Transport and Housing and the credit union. It is that that's been allocated for persons that wish to be homeowners to go to them, and if they fall within the requirements and approval of the credit union, they will be drawing down out of that $25m to facilitate paying for the mortgage.”

Mrs Coleby-Davis said the MoU has been in discussion for "quite some time", and the ministry has been considering alternative financial institutions that can provide buyers with good interest rates and terms.

She said: "From day one it's been our priority to find financial models that can assist young and old Bahamians, who want to be homeowners, to make it possible. And so one of our ventures was to consider other financial institutions that will be able to provide good term rates and good mortgage options for Bahamians.

“And we have worked on this MoU for quite some time. We've had a number of meetings, a lot of heavy lifting, a lot of conversations with the Office of the Attorney General and with our colleagues at the Teachers and Salaried Workers Credit Union.”

Mrs Coleby-Davis said the agreement allows persons who may not be able to qualify for a mortgage from a traditional lender, or are not comfortable with the rates and terms currently offered, to access financing.

“What this means for Bahamians is it's another avenue, it's another option. While the Department of Housing does not dictate to persons who they should choose to do business with, when it comes to taking out a mortgage we try to make sure that there are options and opportunities available to all persons," she added.

“Some may not be able to get a mortgage from a financial institution because their terms are too high; the interest rates are not comfortable for their financial position. And so we've been working hard to explore options that give them a better avenue to home ownership.”

Mr Miller said the credit union's mortgage financing programme will include flexible loan terms, competitive interest rates and a streamlined application process. He added that the initiative will extend to the Family Islands as the credit union is "keenly interested" in doing business with Family Island residents.

He said: “Key features of the credit union's mortgage financing programme include competitive interest rates, flexible loan terms and a streamlined application process. We can go further than the traditional commercial banks that are hesitant to invest in the Family Islands. We are very much, and keenly interested, in providing financing for homes and others in Family Islands.”

Mrs Coleby-Davis said the Government has the capacity to construct homes on every island. While Family Island residents are traditionally sold lots and build their own homes, she added that since interest in turnkey homes has grown the Government is now providing this option.

She added: "We have property and projects, basically on all, maybe not in the same size, but I think we have availability to build on all Family Islands. But remember, this is the first time that government is actually building affordable homes in the Family Islands.

“Our structure for the Department of Housing was normally we would sell lots in the Family Islands, and it's because a lot of them prefer to build their own homes. And now the demand is greater for them to get turnkey options, and so that's why we've slowly advanced into the Family Islands. We're going to grow the project as we go on to other Family Islands."

Mrs Coleby-Davis said the Ministry of Transport and Housing tries to keep the price of homes below $200,000, with costs typically ranging between $155,000 and $190,000. She noted that fluctuations in the price of materials are the main contributor to higher costs.

She said: “So our two-bedroom home, the one that doesn't have a garage in Renaissance, is about $155,000 and it goes up to maybe about $190,000 or so. We start getting around $190,000 because we have traditional models that have been built.

"The cost is greater for the materials. So that will be Pinecrest and some that we're now building in Dignity, which has been the traditional brick and mortar, and so that costs a little bit greater, but we tried to keep it below $200,000 for homeowners. Sometimes it may vary because we're struggling with the cost of materials changing around us as well.”