The timeframe for restarting the Government Guaranteed Home Assisted Mortgage (GGHAM) programme, for first-time Caymanian homeowners, remains uncertain as it awaits a new agreement with participating banks.
National House Development Trust General Manager Julio Ramos, in an interview with the Cayman Compass last week, said he is hoping to get the programme rolling soon, but the new agreement between the banks and government has not been finalised.
The programme is in a “holding pattern”, Ramos explained, as the government is revisiting the agreements “with the intent of issuing more arrangements”.
Since GGHAM expired back in 2012, two successive Progressives-led administrations have attempted to get the programme restarted to help Caymanians buy their own homes.
The sticking point at one stage was getting the banks to agree to the terms of the guarantee government was proposing, but now it is not clear what is causing the hold-up. Six banks had previously agreed to team up with government to get the programme off the ground again.
Under the initiative, government guaranteed up to 35% of the mortgage for Caymanians buying their first home up to a value of $200,000. In 2007, government entered into agreement with six participating banks for GGHAM mortgages, amounting to a total of $65 million. The agreement was for mortgages to be drawn within five years.
A total of 325 loans were approved under the programme between 2007 and 2012 amounting to $57.2 million, with a government guarantee of $20 million.
A total of 325 loans were approved under the programme between 2007 and 2012 amounting to $57.2 million with a government guarantee of 35% in the sum of $20 million.
Ramos said 225 of those individuals have since left GGHAM, leaving about 100 remaining in the programme.
“Individuals moved on, they sold the property, their guarantee was met,” he said, adding that cleared the way to extend the initiative to other first-time buyers.
To date, according to NHDT’s September 2020 figures, there are 102 active mortgages under the programme, totalling $18 million with a 35% guarantee estimate of $6.3 million liability.
Government, Ramos said, is aware what needs to be done to restart the process. However, looking at the impact of COVID on the economy will also be a factor in discussions with the banks.
He said once the programme is restarted it can cater to 225 individuals, but right now the interest is basically focussed on the 150 individuals who are waiting in line for the green light.
Ramos says after that approval, he expects another 150 people to apply to join the programme. It will just be a matter of “extending or increasing the guarantee,” he said.
Ramos said when the Trust speaks to banks “they are generally on board”.
“However, the nitty gritty of fine tuning the agreements, especially factoring in the rates and how the market has been impacted, remains to be done,” he added.
Currently government’s contingent liability for the programme stands at $1.9 million, for at an average of 11% remaining on active mortgages. The total current GGHAM liability balance on active accounts with the banks, according to NHDT’s September figures, is $6.3 million and the accumulated principal paid on those accounts amounts to $4.4 million.
Ramos said those figures provide capacity for government to get the programme going again.
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