Make housing schemes affordable

THANK you The National and reporter Rebecca Kuku for the report Reducing loan interest, longer repayment term for affordability yesterday (Nov 27).
BSP’s (Bank South Pacific) first home ownership scheme (FHOS) was implemented in 2014.
Five years on, there are now 850 new proud homeowners.
Being a first homeowner is definitely not a stroll in the park.
The homeowner is now on a contract to pay the bank for the next 40 years and has to meet the recurring costs such as electricity, water, land tax, land rent, insurance, renovations and so on and so forth.
Sacrifices have to be made and lifestyles have to change to be able to live in your own house.
The report was comprehensive and covered a lot such as fees, government charges, eligibility and comments by Paul Thornton, general manager retail BSP.
What BSP have basically done is address the affordability aspect by extending the loan term from 25 years to 40 years, reduce the nominal interest rate from 8-4 per cent per annum effectively reducing the fortnightly loan repayments.
It has also reduced the equity from 20 to 10 per cent.
This product is currently the best in terms of first home ownership finance in the country and kudos to BSP.
Having said that I believe there is room for improvement that can be effected immediately.
The FHOS product has been possible because of K200 million given to BSP by the Government.
You could say that was and is just one of the reciprocal business tied to this deal so to speak.
The K200 million warrants a further decrease in interest rate from 4 to say 3 per cent.
How does BSP justify the current rate in terms of the cost of funding, the interest it makes on the K200 million, what it pays to the Government, and the interest it charges on FHOS loans? BSP should also partner with Nasfund and Nambawan Super to cater for lower income earners that are their members, shareholders and customers.
It appears these super funds are operating in isolation and serving only high income earners in the housing space.
These organisations are well managed and run by credible CEOs and competent boards and should relook their strategies on housing in the country.
It would be great if BSP and the super funds give their opinions through this medium.

IVAN GORDON