FRIDAY, JUNE 2, 1978
BANKS INVITED TO PROVIDE MORTGAGES FOR HOME
OWNERSHIP SCHEME
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GOVERNMENT HAS INVITED ALL BANKS AND OTHER FINANCIAL INSTITUTIONS TO PROVIDE FUNDS FOR PEOPLE WISHING TO TAKE OUT MORTGAGES TO BUY FLATS UNDER THE HOME OWNERSHIP SCHEME.
THE INSTITUTIONS HAVE BEEN INVITED TO COMMIT FUNDS ON MORE FAVOURABLE TERMS THAN THOSE NORMALLY AVAILABLE IN THE OPEN MARKET.
THE GOVERNMENT'S INVITATION, WHICH WENT OUT YESTERDAY (THURSDAY), GIVES BASIC DETAIL OF THE MORTGAGE FACILITIES IT WISHES TO SEE PROVIDED AND OF THE CONTRIBUTION THE GOVERNMENT WILL MAKE IN GUARANTEEING A THIRD OF EACH MORTGAGE LOAN.
A GOVERNMENT SECRETARIAT SPOKESMAN SAID THAT FINANCIAL INSITUTIONS WILLING TO TAKE PART IN THE SCHEME WILL PROVIDE FLAT PURCHASERS, SELECTED BY THE HOUSING DEPARTMENT, WITH LOANS OF UP TO 90 PER CENT OF THE PURCHASE PRICE OF THE FLATS, WITH REPAYMENTS SPREAD OVER A MAXIMUM PERIOD OF 15 YEARS.
INTEREST RATES WILL VARY BETWEEN 7-1/2 PER CENT AND 9 PER CENT A YEAR ACCORDING TO A FORMULA BASED ON MARKET INTEREST RATES AT THE TIME THE LOANS ARE MADE.
THIS FORMULA IS ONE THIRD OF THE AVERAGE OF THE BEST LENDING RATES OF THE CHARTERED AND HONG KONG AND SHANGHAI BANKS, PLUS ONE HALF PER CENT; PLUS TWO THIRDS OF THE CONVENTIONAL MORTGAGE RATE QUOTED BY MAJOR BANKS (CURRENTLY ABOUT 10 PER CENT), LESS ONE PER CENT. THESE RATES WILL BE AVERAGED OUT OVER A 12-MONTH PERIOD AND THE APPLICABLE RATE PUBLISHED IN THE GOVERNMENT GAZETTE EVERY THREE MONTHS.
THE SPOKESMAN SAID THAT, AT PRESENT DAY INTEREST RATES, THE ACTUAL RATE CHARGED UNDER THE SCHEME WOULD BE ABOUT 8 PER CENT.
THE INTEREST RATE TO BE CHARGED ON THE FIRST LOANS TO BE MADE WILL DEPEND ON MOVEMENTS IN MARKET RATES OVER THE NEXT 12 MONTHS.
HE SAID FINANCIAL INSTITUTIONS WOULD BENEFIT FROM A GOVERNMENT GUARANTEE OF ONE THIRD OF AMOUNT OUTSTANDING ON THE LOAN.
THE SPOKESMAN SAID THE NAMES OF THE FINANCIAL INSTITUTIONS PARTICIPATING IN THE SCHEME WILL BE PUBLISHED FROM TIME TO TIME AND WILL BE MADE AVAILABLE TO HOME OWNERSHIP SCHEME FLAT PURCHASERS BY THE HOUSING DEPARTMENT.
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