Video: Mortgage Guarantee Programme
[Updated] Premier David Burt is holding a press conference this afternoon [Oct 13] to “highlight the Mortgage Guarantee Programme.” We will have additional coverage later on and in the meantime the live video is below.
Update: The Premier said, “The Government has reached an agreement with the Bermuda Commercial Bank to provide a partial guarantee in support of local mortgages.The Government’s support reduces the risk to the Bank, and in return for the reduced risk, the Bank will offer approved applicants a reduced interest rate starting at 5% and also reduce the standard down payment from 20% to 10%.
“In terms of savings, under this pilot programme, a new $500,000 mortgage will save approximately $500 per month, and a new $750,000 mortgage will save roughly $650 per month. The programme will also require only a 10% down payment where the standard requirement is 20%.”
Update: The live broadcast has concluded and the 22-minute replay is below
Update 5.05pm: Premier Burt’s remarks:
Good afternoon members of the media and colleagues; good afternoon to the people of Bermuda.
Today we are at Loughlands, a true success story in creating new homeowners through direct Government assistance. Between 2008 – 2011 the Bermuda Housing Corporation facilitated, through four phases, 60-plus families becoming first-time homeowners in this new condominium community in Paget.
This 96-unit development provided an opportunity for Bermudians to purchase an affordable home and to build a community. The need for affordable housing was met by this project, as well as others around the Island.
Just over a decade later, access to the housing market is again an issue I hear on the doorstep in casual conversations with young professionals, expert tradespeople, and women and men across the Island.
After securing an education or employment, many Bermudians look to enter the property market as a means to secure a family home and an asset that will benefit them and the next generation. However, this aspiration can be frustrating at various stages as there are sometimes barriers to entry, such as high interest rates and high down payments, making entry into the market seem insurmountable.
This saps hope from young people who desperately want to own a piece of the rock – and it is the role of your Government to deliver on our promise to create a nation of owners.
On the first page of the Progressive Labour Party’s 2020 General Election Platform, we pledged to create a nation of owners and to “work with local banks to provide security for mortgage loans to reduce interest rates charged on mortgages.”
We have listened to the people who openly shared their experiences. In keeping with our promise to the electorate, I am today pleased to advise of a joint venture, in the form of a pilot mortgage guarantee programme, between the Government of Bermuda and the Bermuda Commercial Bank.
The Government has been working with many local stakeholders on opportunities to lower mortgage rates in Bermuda in an effort to reduce the financial pressures on families. Today’s announcement represents the first step in that process. With this pilot programme, the Government has reached an agreement with the Bermuda Commercial Bank to provide a partial guarantee in support of local mortgages.
The Government’s support reduces the risk to the Bank, and in return for the reduced risk, the Bank will offer approved applicants a reduced interest rate starting at 5% and also reduce the standard down payment from 20% to 10%.
Whilst this is a pilot programme with limited capacity estimated to benefit over 250 Bermudians, the Government is advancing a broader scope initiative that will look to reduce mortgage rates at our major local banks generally.
In the meantime, this pilot programme will provide an immediate hand-up to Bermudians as we recognise the impact local interest rates and high down payments have on the dream of homeownership for many Bermudians.
The pilot programme will be limited to a $50 million aggregate guarantee, and the eligible borrowers will be rolled out in three phases. This first phase will be for first-time home buyers. Many Bermudians wish to own a “piece of the rock”, and this initiative will assist them in achieving that dream by making it more affordable. The second and third phases are being fine-tuned and will be the subject of further announcements.
We aim to extend this programme to include those with existing mortgages interested in transferring them over and participating in the programme with reduced interest rates.
The approval process and the relationship throughout the entirety of the loan will be between the borrower and the Bank. The Government will have no involvement or influence with any decision made by the Bank.
It is also important to note that the Government Guarantee will not be in place for the entire mortgage term. As each loan is unique, there is no definitive time period as to when the guarantee will fall away; however, the Government Guarantee will remain in place for a minimum of five years and is anticipated, on a normalised basis, to be in place between five to 10 years.
This process will allow the Government then to apply the guarantee in support of additional mortgages.
In terms of savings, under this pilot programme, a new $500,000 mortgage will save approximately $500 per month, and a new $750,000 mortgage will save roughly $650 per month. The programme will also require only a 10% down payment where the standard requirement is 20%, saving new homeowners $50,000 or $75,000 in the two scenarios I just mentioned.
Many Bermudians may be working on saving for a 20% down payment to buy their first home and are halfway there. This programme, which reduces the down payment to 10%, will enable them to advance their home ownership ambitions sooner, which I’m sure is welcomed news as many young persons have called on their Government to make the dream of home ownership easier.
Other associated loan fees will also be reduced, which in its totality will provide additional savings for Bermudians purchasing a home or refinancing their existing mortgage.
I am also pleased to advise that the Bermuda Credit Union has been in discussions with the Government to implement a similar programme. The Government looks forward to working with this member-based organisation to assist them in providing mortgage rate reductions to their members in the near future.
Corporate interests argue that the risk they take in investing in Bermuda or within the industry should be supported by tax relief or government guarantees. Governments provide both when it appears that the investment is worth it and will bring some economic benefit to the community.
Creating a nation of owners was our promise. This programme represents a direct investment in the people of Bermuda, deploying the Government’s capacity to support economic growth for the people we serve. The economy will benefit from a growing number of Bermudians owning homes in Bermuda and receiving this Government’s tangible support to make that a reality.
Before I hand over to Mr. Neville Grant the CEO of the Bermuda Commercial Bank, I want to thank the Bermuda Commercial Bank for working with the Government to design this programme. And I want to extend special thanks to MP Jache Adams who works in the Ministry of Finance and who was a driving force to make sure this programme is a reality. I invite Mr. Neville Grant to provide some remarks.
Thank you.
Seen more of the pillock during the last two weeks than we’ve seen in the last two months. Nervous? Trying to give the illusion of being competent?
Until we have an effective opposition (hint hint) because the present one is spineless and can’t sell enough candy, to get people to vote for them. THIS IS HOW IT WILL BE 30-6
GREAT STUFF!
THAT’S MY LEADER AND MY PARTY!
YOu blind?
It may be your leader and your party, but put simply this isn’t his call to make.
This is a global issue, you can’t just say to the banks, does as I say. If he says that, they leave. If you offer more competition, they have much the same clearing as any other bank. They all leave.
I think he knows this. It’s shameless electioneering from a leader soon to be an ex leader.
Went onto Bermuda Commercial Banks website.
Let me see first, you need to become a client. Open a bank account.
Then you can apply for a mortgage. Get all the paperwork in and submit.
Then someone will contact you after they see if your eligible.
Sounds like campaign promises.
Why not list, if you have x amount of income and you are a first time homeowner than we can approve up to x amount of funding. No first open an account… I stopped there.
Is there an election soon?
Obvious you have never done banking with other 2.
This isn’t abnormal.
Leadership fight.
With Dickenson the island may float for a longer period.
With Burt your new mortgage will be at a pumping station.
Half-a$$ed and desperate.
Bermuda desperately needs a competent Minister of Finance. The guarantee for Southampton Princess now this on top of the Hospital guarantee and all the unknown guarantees supporting various quangos. Add to the $3.5bn debt and the underfunded pension schemes and Bermuda is underwater. A population increase won’t help, when there is a net exodus of people.
Yes sir! My family and I are next. Forced out of the country of our birth because it just doesn’t make financial sense to live here anymore.(Black Bermuda family) we are out of this ridiculous island ! Had enough! renting and the cost of living alone is to expensive here . So let’s not even talk about a mortgage.
Help us all i see a very nervous premier trying to hold onto his power position and a general election not far down the road
Run Forrest Run…. The fiscal clowns who today are the plp/Bermuda Government leaders, are proving nothing more than their own fiscal incompetence by pushing this latest boneheaded idea… non of this comes as a surprise because all of the plp leaders have never been successful in the private sector, and this policy proves why..
It’s shameful the lengths they will go through to stay in power, and those stupid enough to take this “ trinket “ will certainly deserve everything they get… Did 2008 not teach what happens when a government pushes for everyone to own their own home wether they can afford it or not?
Fools gold for anyone that falls for this nonsense….SMDH!!!
While banks around the world are slowing down giving out loans because of inflation, bermuda is finally giving 10% down payment options for a mortgage. Anyone stupid enough to really believe that this is true, then you most likely voted for plp. The down payment was never 20% it was in the 30s. Don’t waste your money buying a mold riddled house in bermuda, where your neighbors are literally right next door of your million dollar home. For a million you would get 1/2 an acre of land with your house anywhere else in the world lol. No banks would ever give these loans government backed or not. England did the same thing and they’ve literally destroyed their economy making the pound all but worthless. Marico from four star pizza needs to run for premiere because we need someone who can turn a profit in charge
That is all very nice, but BCB does not engage in local retail banking and has not for 30 years.
While this is happening the OBAxxxxUBP are running around with no new voters, no new team and no new name. LOL
Keep up the big lie. Never give up on the big lie!
The OBA is not an issue, but you should be very worried about the PLP who is selling off Bermuda to foreigners like there’s no tomorrow. Increasing the numbers of expats who are taking the best homes, so what is left for Bermudians? No wonder the Premier and his Cabinet keep quiet, except to throw out some “gifts” like this, an ill thought out poisoned chalice by the way.
If you believe the oba is winning any elections it just shows how dumb you are! Keep up the big denial never give up on the big denial!
Well they should, based on current incompetence. Can it be worse than now?
You have any other tricks? Your one theme is boring…it’s all you’ve got. Enjoy the welfare, from the OBA, while you can. LMFAO
“If you believe the oba is winning any elections”
We don’t…no one even mentioned it….except you:
“it just shows how dumb you are!”
So, it kind of shows how dumb you are.
Nobody thinks the OBA will win anything.
Bermudians want to be impoverished, as long as their government is in power.
It’s called revenge for the 40 thieves….unfortunately, you all have to suffer in order to ‘win’.
Pilot scheme.
Gencome scheme.
Is it just me seeing the common denominators here.
Neville, come on, you can do better. This makes no economic sense and you know it, you are a good man.
Go with your head and ignore this party political nonsense. He wants you as a puppet.