Housing scheme winning hearts

 THE First Home Ownership Scheme, an initiative of the O’Neill Government and Bank South Pacific (BSP), is shaping to be a roaring success.

BSP says there has been overwhelming interest since the scheme agreement was signed almost 12 months ago. To date, the bank has funded loans totalling K4.2 million, most of them are in the National Capital District.

The scheme provides Pa­pua New Guineans access to flexible and affordable financial arrangements to enable them to own their own homes.

“BSP believes that home ownership is a means for ordinary Papua New Guineans, employed in the public and private sector, to establish an asset base that can be passed onto their children,” the bank said in a statement.

“Through the support of the Government, steps are being taken to set up a long-term deposit base which addresses liquidity and market risks associated with long-term lending such as housing finance.”  

As a result of these actions, BSP will be able to provide housing loans to approved first home borrowers, over a 40-year term and at an interest rate of 4 per cent per annum.

While there are some conditions to the loans, including a maximum loan amount of K400,000, the O’Neill Government and the bank that the scheme will help address housing issues and offer wealth creation opportunities. The scheme is not a guarantee facility.  It is a product that will be offered by BSP adopting a commercial approach, albeit over a much longer loan term and at a somewhat concessional interest rate. The availability of affordable land and housing packages is essential and will require the support of the Government and private sector participants from the housing industry. 

BSP must be commended for its involvement in the scheme, which is another example of the bank’s approach to addressing the needs of Papua New Guineans.  Not only has BSP taken banking services to over 40 branch and 44 rural sub branch locations, it continues to provide support for health, sporting, cultural and community initiatives through sponsorship. 

When launching the sch­eme last May, Prime Minister Peter O’Neill described it as the best initiative so far to address the basic human need for shelter. It was envisaged that through this scheme owning a home would not remain a dream for many citizens but hopefully be a reality for wage earners or those who had a source of regular income and are able to afford it.  

O’Neill promised fellow citizens that the scheme would make housing affordable and for the first time the Government would make money available in the annual budget and paid directly into BSP for people to borrow to buy homes.

He announced that an initial K200 million would be made immediately available to kick-start the housing loans scheme followed by another K200m in the 2015 budget for this first home ownership scheme. 

BSP, as the largest commercial bank with branches and sub-branches in all provinces, was well-placed to be part of this initiative.  

What’s more, as part of its community obligation, BSP would underwrite all costs associated with the scheme and maintain a low 4 per cent interest on all loans over a period of 40 years. 

The 4 per cent interest is the lowest offered by a bank in this country and basically aims to improve access to credit for Papua New Guineans. Loan repayments and interest payments will be placed into this revolving fund to allow for future continued borrowing.

However commendable the housing scheme is, it was bound to be met with some reservation and scepticism because of many similar housing schemes initiated by government de­partments, super funds or even the National Government have never materialised or made little success owing to varied reasons, including the scarcity of state land. 

Assurances by the Prime Minister and his State Enterprises Minister Ben Micah that more state land would be freed up were indicative of a government committed to seeing this housing scheme bearing fruit. It is most encouraging to note that the scheme well on the way to being a highly successful housing programme.