As Jamaica’s housing industry continues to reel from the local and global financial and economic crunch, the Jamaica Mortgage Bank (JMB) is reportedly subsidising housing developments that are priced below J$15M.
Several housing developers have reportedly expressed an interest in benefiting from the loan funds, which are to be provided at a concessionary rate of 20% p.a. This rate is said to be a “marginal subsidy”, as it is below the bank’s weighted average cost of funds, which is 21.1%.
The JMB is able to do this now, because the Government has given it US$1B worth of tax-free bonds, so the JMB’s cost of funds has dropped by 30%, and they will be passing this on to the developers.
At present, the cost of loans for development purposes is approximately 29%, and could climb higher, as the economic climate continues to worsen. While the JMB is not yet ready to actually disburse these funds, an announcement in this regard will be made soon.
It is important to note that in order to qualify for this 20% money, the projects being presented must have an excellent probability of being sold even before the completion of construction. Also, only developers who are constructing homes that will be sold for below J$15M will be able to access the concessionary loan.
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