Low-interest loans to help Caymanians get on housing ladder

Caymanian families are being offered low-interest mortgage deals to buy homes or avoid foreclosures on existing properties.

The Cayman Islands Development Bank is offering loans of up to $600,000 at interest rates as low as 3.75% for the first two years, significantly below the rates on offer from commercial banks.

There is currently $15 million earmarked for such loans with terms of up to 30 years. That is enough for 25 people to borrow the full amount. The actual number of people that could benefit is likely to be higher, given that loans will vary up to the maximum of $600,000.

The funds are available to buy or build a home, and for mortgage refinancing.

The scheme could be extended, if successful.

Mark Scotland, chairman of the development bank’s board, said it was open to people with existing mortgages with other banks, as well as people looking to get on the housing ladder for the first time.

“The current focus is providing two-year term, fixed rates to assist Caymanian families that are contending with inflation and the possible threat of foreclosure,” he said.

“This fixed rate product provides a level of certainty and security in these inflationary times with rising interest rates affecting mortgage payments. Customers can sleep easy knowing they won’t have to worry about rising interest rates over the next two years as their payments would be fixed.”

Flexible lender

He acknowledged the arrangement may have to be extended in two years if the economy does not improve. But he said the development bank, which receives support from government, has the capacity to be more flexible and compassionate than commercial lenders.

Scotland said the current scheme is in line with government’s objectives to make housing more affordable. He said the maximum borrowing limits had been raised from $450,000 to $600,000 to reflect the increase in house prices across the islands.

The offer, initially announced at the last meeting of parliament, has been immediately popular with $3 million in borrowing requests already under consideration.

Making housing more affordable

Deputy Premier and Finance Minister Chris Saunders said in a press release Monday that the move would make home ownership viable for more Caymanians, despite the current economic climate.

“In an environment of rising interest rates and increasing property costs, we are seeking ways to make borrowing more affordable for Caymanians.”

He added, “While we do not have the funds that the commercial banks have, we must do what we can with what we have. The situation for first time Caymanian buyers was becoming increasingly difficult, and we had to find ways to encourage and facilitate Caymanian home ownership.”

Housing Minister Jay Ebanks said the initiative would help more families achieve the ‘Caymanian dream’ of owning a piece of the rock.

Scotland added that the development bank was in a position to help government achieve the goal of greater home ownership for Cayman families.

“The role of the CIDB is to support the economic growth and development of the country by making available financing primarily for housing, education, and business purposes,” he said.

“With the various factors that are contributing to increasing housing costs for young Caymanian families, I see the role of the bank becoming much more important in facilitating access to housing in an affordable way.”