First Home Ownership Scheme Loans Formally Announced by BSP
The Bank of South Pacific in conjunction with the Government of Papua New Guinea (the “State”) have formally signed an agreement to make First Home Ownership Scheme Loans (FHOS) available.
Following an initial announcement in May this year, the scheme is a direct response by the State to PNG’s chronic shortage of “quality and affordable housing”. In particular, the State has recognised the fundamental impact this crisis is having on the lives of many Papua New Guineans, particularly in the larger cities of Port Moresby and Lae. Whilst benefits will also flow regional areas which are experiencing significant rises in the cost of houses and other accommodation.
BSP Group CEO Robin Fleming said of the scheme “BSP believes that home ownership is a means for ordinary Papua New Guineans to establish an asset base that can be passed onto their children. So it is with pleasure that we here today with the Prime Minister to announce this joint initiative, the First Home Ownership Scheme,”.
Key details of the FHOS
Eligible borrowers will have access to heavily discounted interest rate and preferential loan terms. Below are the key terms of the FHOS.
Commercial terms of the loan:
- Maximum loan amount of K400,000
- 4% fixed rate of interest
- Up to 40 year loan term
Analysis – is the First Home Ownership Scheme Loan for you?
For home buyers eligible for the Scheme, the loans terms are very favourable when compared with standard home loan terms.
The following is a comparison of the commercial terms of the FHOS versus a typical home loan from one of the major commercial banks in PNG such as BSP or ANZ:
- 4% fixed interest VS current interest rates of approx 8.45% – 9%
- 40 years for repayment VS typical repayment terms of a maximum of 30 years
On the basis of the above, the First Home Ownership Loans provide a large incentive for people searching for their first home to buy in PNG .
However, borrowers should be aware that the First Home Ownership Scheme Loans are still a commercial arrangement between the borrower and BSP, and are not a form of grant, tax break or other concession by the Government. As such, borrowers will still be expected meet their loan obligations.
Reaction from the real estate industry
The PNG real estate industry and in particular real estate agents and property developers have welcomed the launch of the First Home Ownership Scheme Loans. The Port Moresby real estate market in particular has experienced somewhat flat growth over the past few months and agents are expecting this initiative to drive increased interest in houses in the K200,000 to K700,000 range.
Similarly, the scheme bodes very well for large scale housing developments such as the housing development at Edai Town in the National Capital District. Edai Town has a range of accommodation options starting at K280,000 for townhouses and ranging up to K498,000+ for freestanding houses; this places the project squarely within the reach of those considering the FHOS. The official launch First Home Ownership Loan Scheme is expected to see a flood of interest for this project and others similar to it throughout PNG.
Want more information?
To be informed about the full details of the FHOS when it becomes available click below.
Provide your details to receive more information!
And to see properties between K100,000 – K500,000 Click Here and happy house hunting!
Comments