First-home loan continues

By REBECCA KUKU
BANK South Pacific continues to offer its First Home Ownership Loan and its retail lending sales officers are available at all branches to accept applications from potential borrowers, says Bank of South Pacific Ltd chief executive officer Robin Fleming.
Fleming told The National that the general conditions include having been in full time employment for a reasonable period of time and that they are able to contribute the equity of 10 per cent for the first home loan.
He said applicants who had recently graduated and entered the workforce would find it more difficult to have the equity that was required.
“This is not unusual and is the same in other countries where graduates and newly employed need to work for a number of years to save the equity and be in receipt of a salary sufficient to meet the loan repayments,” he said.
Fleming said the first home ownership loan was still available and interested people could visit their BSP branch to apply.
In 2015, the BSP first home ownership scheme was launched, with the Government depositing K200 million for BSP to provide low interest rate housing loans to help Papua New Guineans. Since its inception, many people raised concern on how the scheme could only be accessed by those with capital and was not actually helping address the housing issues of middle and low income earners.
However, Fleming said in an earlier interview that the scheme did not involve any credit enhancement or guarantees from the Government.
“In the event a scheme loan goes into default, and BSP has to recover the outstanding loan, our normal recovery actions are pursued without any guarantee from the Government,” he said.
“It was also agreed that the scheme should apply for new houses costing about K400,000 (or below) to stimulate the construction sector growth.
“To date, 847 house buyers have benefited from the scheme’s total portfolio which is K258 million. There is a good cross section of customers who have been able to take advantage of the scheme, including public servants, private sector employees and some BSP staff,” Fleming said.
“BSP staff is also not the majority of the scheme borrowers. As a result of the scheme, some 1,000 new houses had been constructed with considerable economic benefits.”
Fleming said when the scheme agreement was inked with the Government, it was initially capped at K200 million.
“However, the success of the scheme has allowed BSP to increase its portfolio cap without seeking additional support from the Government. BSP decided to increase the loans available under this scheme to K400 million and also to rebrand the “extended scheme” as an independent scheme of the Government without any funds from the Government.
“In total, BSP has a housing loan portfolio of about K600 million and between our standard home loan product and the extended scheme, helping more than 2,300 house buyers. Our extended housing loan scheme caters to both lower and high cost houses.
“Lower interest rates and longer term loans help customers with the purchase of their first home but the biggest factor is the cost of construction and developers continue to look at lower cost options for new housing projects,” Fleming said.