CIDB rolls out cut-rate 30-year home loans
(CNS): The Cayman Islands Development Bank (CIDB) has begun lending money to Caymanians to buy their own homes as low as 3.75% interest. These low mortgage rates on 30-year loans for qualified borrowers, significantly below the current prime rate, are fixed for two years and government hopes it will help more local people get onto the property ladder. With $15 million available for the programme, the bank can provide loans of up to CI$600,000 for each borrower to buy or refinance a home.
This offer was announced in the last meeting of Parliament and has attracted significant interest among prospective borrowers, according to a press release about the loans. CIDB Board Chairman Mark Scotland explained that the focus is on providing two-year terms with fixed rates to assist Caymanian families that are contending with inflation and the possible threat of foreclosure.
“Within two weeks of launch, the bank already had $3 million in its pipeline under consideration and this figure is expected to double over the coming weeks. The bank has utilised a tiered interest rate system to address risk and avoid a potential increase to its provisioning for bad debt,” he said.
“Financing is offered up to 30 years to assist with lowering monthly payments. Unlike a commercial bank, the CIDB has the flexibility to extend these rates after the two-year fixed term as the bank’s debt to its bondholders will be extinguished in three years,” Scotland added.
He said this fixed rate provides a level of certainty and security in the face of rising interest rates that are impacting home loan 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,” he added.
In addition to the fixed rate mortgage offer, Scotland noted that the CIDB has a lending programme in place for affordable homes to be constructed by the National Housing Development Trust (NHDT) with 100% financing available, as well as a land loan scheme with interest rates offered based on the same tiered system as the mortgage programme.
In keeping with the government’s intention to remove barriers to Caymanian home ownership, Scotland said the mortgage sector would remain of key importance to the CIDB in the next year. “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, noting that the bank has been doing this since its inception.
As housing costs for young Caymanian families increase, Scotland believes the bank will become much more important in making housing affordable. “Adequate housing is a basic human right and the CIDB sees its role in working with the government to ensure this as an important one,” he said.
Economic Development Minister Chris Saunders said the goal was to make home borrowing more affordable for Caymanians. “The two-year fixed rate is significantly better than current offerings at the local commercial banks, especially as we have seen the US Federal Reserve raise the prime rate last month, with more hikes likely to come over the course of the year,” Saunders said.
“We have found that rising interest rates have provided another barrier to local home ownership. 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,” he added.
The government’s Strategic Policy Statement pledges to “provide solutions to improve the well-being of our people so they can achieve their full potential” and “provide adequate and affordable housing in our communities”, Saunders noted. There are a number of initiatives aimed at achieving this goal in addition to CIDB loans, including government-guaranteed home-assisted mortgages, quality affordable housing, and reduced stamp duty on land for Caymanians.
Housing Minister Jay Ebanks said the government was rising to the challenge in these difficult times. “Home ownership is an integral aspect of a society’s stability and affluence, and of building personal and family wealth,” he said. “Owning a piece of the Cayman rock is the foundation of the Caymanian dream. Too many of our people have felt locked out of that dream. This must, and will, change.”
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Category: Banking & money, Business, Politics
I hope the funds are loaned to qualified borrowers, and not merely any borrower the Politician supports getting funds.
Note “fixed for 2 years”. This is merely a ploy to draw people in and drum up business for this entity. Commercial banks do the same thing! At the end of the 2 year period the rate will be increased. So don’t get too excited. If it was a fixed rate for the full term of the loan then it would be different. Be careful with this people.
Well, the Feds are in on-going discussions about another sharp rate hike this week. The anticipated rate increase will be the same as the last (June), 0.75. Oooouch!😁
What about also curbing the excessive commissions being charged by the real estate vultures?
Great. A good rate on a 1.6 million dollar 1500 sq foot home. Who cares. We need to raise wealth, education and lower foreign ownership to only those who live and work here. PR due to investment should pay tax.
its a free market…if they are making so much, set up a real estate company and undercut them and make your fortune.
But it’s not though is it? It’s the opposite. It’s anti-competitive. Groups of companies working together to fix prices i.e Cireba. Parasitic worms.
Hard to undercut a cartel
Rise so high, yet so far to fall
A plan of dignity and balance for all
Political breakthrough, euphoria’s high
More borrowed money, more borrowed time
Backed in a corner, caught up in the race
Means to an end ended in disgrace
Perspective is lost in the spirit of the chase
Foreclosure of a dream
Those visions never seen
Until all is lost, personal holocaust
Foreclosure of a dream
Can I borrow the whole $15M for a Watermark penthouse unit?
Sure, I assume you already have the other $20 million required for the deposit and stamp duty?
Yes, got that from NAU
What a great idea. We’re about to enter into a recession and the cost of living in Cayman has gone through the roof but sure, let’s give people lots of money they probably won’t be able to pay back. Can someone say negative equity!?
Foreclosure trap waiting to happen. Majorly concerned with who will be buying these properties when the original owners cant handle the rate spike just 2 years in.
Anyone who has studied finance since the US housing crash of’08 hears the words subprime fixed rate mortgage and a cold pit of dread forms in their gut.
These are low interest rates loans and NOT negative equity loans. Offering lower payments helps existing homeowners so if they can make higher payments now then why do you assume that they cant meet lower payments? If you dont have all the facts then dont write untruths.
Yeah great. For 2 years. Then what happens?
When is the next election? Is it not 2 years away
Lets buy them votes old buddy!
This will only benefit very few Caymanians. At the moment, when you consider the down payment, bank fees, stamp duty etc. you need about 20% to buy a property. Why not make adjustments to the Stamp Duty law instead? It would be much cheaper than issuing millions of bad debt.
Government could easily waive stamp duty for Caymanians and up the stamp duty for expats to about 15%.
You realize that the country cannot run without expats right? If you price all of the teachers and nurses out of living here (of of whom are expats) then it probably isn’t going to be a great place to be.
Not all expats here are wealthy! Maybe instead hike the stamp duty for all of those who are buying multiple investment properties who aren’t even living here
Yes but if you are going to have a free open real estate market, there should be some cost. Maybe some sort of sliding scale linked to the number of years on island.
0 years – 15%
9 years – 7.5%
What teacher or nurse can actually afford to buy property in this ridiculous market.
Not sure where you’re living but a teacher here now makes $5000 monthly as their minimum. Even at a 7% interest rate and 45% debt ratio you can definitely afford a house.
How about we just enforce the T&B licensing Law? Our own incompetence and failure to abide by our own laws is our undoing!
Stamp duty already waived for (1st time) Caymanian buyers.
(With details, but general enough for this point.)
3:29 – Thank you. I’ll bet that they’ll still find something to complain about.
How about implementing David Wights and Barbara Conolly’s motion recently agreed in Parliament. It is a quick change that benefits all Caymanians.
First Time Caymanian Property buyers will pay no stamp duty – a considerable saving. And to reduce the stamp duty on property purchases for Caymanians generally from 7.5% to 5%. Again a very good saving. And these benefit all Caymanians now and into the future. Not a select few.
“First Time Caymanian Property buyers will pay no stamp duty – a considerable saving.”
Not sure when you arrived on our shores but this has been in place for 20yrs; if not more.
Not sure how that is a recent motion when its already in place.
How is this good for the islands? Again, a select few people (connected people and family members) will benefit at the cost of the public purse. Those with power and money just want more and more money and they take it from the rest of us with the high duties and fees, to feed it to themselves and their families by way of subsidies, kickbacks and ‘loans’.
$15 million = 20 $600k homes
Will be interesting who gets these loans….
welcome to the new cayman welfare state.
there will be 3 classses in cayman in the future:
wealthy expat residents
low paid imported labour
caymanians(civil servants) living on state handouts…. all funded by the above.
Watch this get abused beyond belief. And what happens when people inevitably stop paying? Will the government foreclose on it’s own people or just write off the debt? Why not address the real issues rather than continually giving hand-outs.
The realtors will be pleased though. Good day for them.
Mimosas for all!
Samosas for me!
The whole idea of a 100% financed discount 2 year window means every Caymanian is free to wade into speculative house and investment property flipping, using CIG cash, hoping prices go up forever, flipping by year 3. Like any asset class, real estate prices can go in both directions, especially with dumb territorial administrators. Why not set up a Caymanian Class A bank that will compete by actually doing business with Caymanians that are following the law, and without colluding on artificial fees? Pass legislation to crack down on the fee gouging!
I see we didn’t learn from the ’08-’09 sub-prime mortgage crisis. This ought to be fun.
Housing Crisis 2, Electric Boogaloo!
CIDB was never supposed to be in the loser/bad loan business, and we spent years unwinding and writing-off the last set, but it seems CIG just can’t help itself. With Mark Scotland no less as gatekeeper as he was with CIFA, what could possibly go wrong?!? Will Canover Watson need a loan for a mansion in Georgia? What are the criteria, or does it depend on the surname of who’s asking?
For two years…what about the remaining 28 years. Could it bloom to 6 or 7%? It is the last thing we need for the government to set a trap for locals.
Consider that might be the intention.
one would hope you can save something with those two years……..
The MPs and party donors will have flipped their investment properties by then. That’s the arb.
Bingo
So you take out a 30 year loan at an interest rate you can afford now but which is only fixed for 2 years and is below market rates, so unsustainable beyond that time frame. So what happens in 2 years when the rate goes back to market?
Mass foreclosures. Those homes are then bought by high net worth individuals and hedgefunds. Turned into permanent rental properties that the previous homeowners have to rent at steep rates to stay in.
Kenny starts crying when enforcement starts
A foreclosure, and a social media post with a crying minister
Is that $15 million in money to lend (so around 30 loans?), or a $15 million budget for losses from the program?
If the former, it’s not that much. Why should 30 Caymanians benefit individually while thousands more suffer? What’s the point in a program that helps such a select few (of the no doubt politically connected)? If a program can’t be offered to all or most who need it, it shouldn’t be run. Find some fairer way to redistribute the vast wealth the country generates from financial services.
Oh, and if the latter… what a waste of money.
Without listed criteria or public announcement, $3mln has already been placed…that suggests that there is a private list of special people this is designed to benefit disproportionately. It might already be entirely spoken for. The public should be able to FOI the loan book, if we are shouldering it, I’m sure we will recognise some of the names.
CIDB is for Mac isn’t it?
House prices are driven by supply and demand. If cheaper rates are effective in getting more people to buy then you’ve increased demand without increasing supply which will increase prices. A few chosen people get more affordable loans but the price goes up for everyone else…
more caymanian entitlement culture…
and another step towards state funding of caymanians to do the basics of their lives.
it fails to address the real issue in the housing market….but remember, writing checks is all pact is good for….
It needs to a 3.75%, 5-year fixed rate for it to work best👌 This arrangement would create a large enough window for the debtor/mortgagee to better assess and prepare for any expected adverse economic conditions e.g. recession. Thus, paving the way for fewer real property foreclosures & subsequently a more sustainable living across most of the Islands.
Losing a home is a travesty. Family life become chaotic and, often times, are in limbo with few options to resettle, resulting in personal difficulties and inevitable poverty.
See you in 2 years.
This will become problematic for many homeowners.
Have they reduced the down-payment? They request 10%
If you can’t afford the down payment, you can’t afford the house.
Not everyone can or should be a homeowner. It is an ongoing EXPENSIVE pain in the neck that only those who have the financial means and understanding of what a home costs should consider.
I couldnt afford my downpayment at the time and i have a house now. That is a dumb comment. there are options and ways
Times are hard for some then they get better.
10% shouldn’t be a problem since they’ll all have wisely invested what they withdrew from their pension.
Now there’s a a bit of humor…
Same 2 year fixed program for “National Housing Development Trust (NHDT) with 100% financing available”
The idea is fine, the details can and will be a problem.
A very good initiative. Hope we really see the program works to assist those in need and not designed for friends and families. Whilst we are it, Mark please look at those that are retired or unemployed to get some relief with the lowered rates?
…because giving a 30 year mortgage to a retired person at the lower end of the socio-economic scale is a good idea how?…
Maybe Kenny could line them up a nice foreclosure on the cheap instead.
So buy a home for low rates for 2 years then loose your home right?
You need a 5 year fixed rate mortgage like other parts of the world to help your people,
Oh dear. This is a recipe for certain disaster.
Sounds like a CIG Ponzi Scheme. Buyer beware. Countrymen/women beware.
Who but this questionable fox in charge of this hen house?
I don’t see this as any sort of security as others have said. It is. It a 30 year fixed interest rate mortgage.
Fixed for two years just takes it to the next election cycle.
This money will mostly, or solely go to buy votes from friends of politicians, never to be seen again.
If this was a transparent process, with longterm fixed rates this would be a good thing.
And then…..how far will $13 million go when the limit is $600k…..I’ll do the math, just over twenty loans!!!!!’
This looks good as a headline, but I am not sure it will be effective. To be eligible you need to come up with the deposit plus closing costs. The average person does not have 10-30% to put down as a deposit, plus the closing costs. The rate is fixed for 2 years, what rate will be charged after?
@Government: Why not waive the stamp duties associated with Planning and Building costs? If corporations can get millions in concessions, surely the former can be arranged? Why not increase the travel allowance? Most people cannot afford to buy clothing, shoes, baby supplies, etc locally; they save and travel to buy same. Why don’t you intervene in the housing and land markets to manage prices and preserve options for future generations?
Good. Meaningful and important. Hopefully Caymanians will grab the opportunity.
20 loans?
Fix the headline. CIG offering 30 year amortization with a fixed rate for two years. A 30 year mortgage is fixed for 30 years. Also is this a true mortgage or like most banks in Cayman they provide demand loans that are repayable at the banks request at anytime.
Good point, my mortgage terms clearly state the balance in whole can be demanded at anytime. Fixing the term for two years also leaves the question, and what then? Suppose it is hiked to align with other banks or higher?
I am all for getting Caymanians to own property, but not at the price of setting up to fail.
We tried this once before…
People tend not to pay these loans back.
Let’s see if the CIG has the backbone to foreclose if needed.
Will any friends of people in power get to take advantage of these loans?
Of course. People in power knew this was in the pipeline and got all their relatives, ducks in order to take advantage. Many properties will now be mortgaged, and remortgaged at the expense of those that need it. True ‘Cayman Kindness’ to their neighbors and those they sit next to in pews..
And the Governor grins. And the Commissioner says the crime situation is stable. #Leggewasright.
Kenny ‘can’t stop cryin’ Bryan will just make another video if foreclosures rear their heads.