CI$15m in new CIDB mortgages available

The Cayman Islands Development Bank has announced they have CI$15 million to lend to Caymanian mortgage seekers and is offering qualifying borrowers interest rates as low as 3.75% for two years, which is significantly below the current prime rate.

The funds are available to buy or build a home, and for mortgage refinancing. The CIDB can lend each borrower up to CI$600,000 for up to a 30-year term. This offer was announced in the last meeting of Parliament, launched via an advertising campaign that has gained significant interest among prospective borrowers, they said.

Deputy Premier and Minister for Finance & Economic Development Chris Saunders said in an environment of rising interest rates and increasing property costs, the government was seeking ways to make 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 U.S. Federal Reserve raise the prime rate last month, with more hikes likely to come over the course of the year,” he advised. “We have found that rising interest rates have provided another barrier to local home ownership.”

Deputy Premier Saunders said that while government did not have the funds the commercial banks had, they felt the need to do what they could with what they had, underscoring thet the situation for first time Caymanian buyers has become increasingly difficult, and they had to find ways to encourage and facilitate Caymanian home ownership, furthering government’s strategic policy.

Housing Minister Jay Ebanks welcomed the initiative by the CIDB, saying: “Home ownership is an integral aspect of a society’s stability and affluence, and of building personal and family wealth. 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.”

CIDB Board Chairman Mark Scotland gave more details: “The current focus is providing two-year term, fixed rates to assist Caymanian families who are contending with inflation and the possible threat of foreclosure. This fixed rate product provides a level of certainty and security in these inflationary times with rising interest rates affecting mortgage 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.”

The bank already had $3 million in its pipeline under consideration and this figure was expected to double over the coming weeks, he advised.

“The bank has utilised a tiered interest rate system to address risk and avoid a potential increase to its provisioning for bad debt. 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,” he explained.

The CIDB felt the programme should be appealing to higher as well as middle income earners, the former who could see an opportunity to switch to free up cash for other investment opportunities.

“This has also had the effect of encouraging the commercial banks to offer some lower rates to retain customers so the migration to CIDB may slow down but new mortgage growth will continue to increase for the bank,” Mr Scotland said.

In addition to this new scheme, the CIDB also has a lending programme in place for affordable homes to be constructed by the National Housing Development Trust with 100 percent financing available, as well as a land loan scheme with interest rates offered based on the same tiered system as with the current mortgage programme.

In keeping with the government’s intention to remove barriers to Caymanian home ownership, Mr Scotland said the mortgage sector would remain of key importance to the CIDB in the next year.