NBS performed ‘spectacularly’ with providing Guyanese low mortgage rates – GS Jagdeo

– says non-performing loans reduced by about 7 per cent
General Secretary of the People’s Progressive Party, Dr Bharrat Jagdeo, has once again debunked claims being peddled in the local news, regarding the New Building Society (NBS).
At his weekly press engagement at Freedom House, the general secretary called out a ‘dangerous’ headline in the news, which claimed that the New Building Society (NBS) lost half a billion in profits and that non-performing loans are expected to affect other financial operators.
The GS said that headlines of this nature in the local news potentially undermine confidence in the country’s banking system.
The article contended that the lowered interest rate prompted by President, Dr Mohamed Irfaan Ali has led to an interest rebate amounting to some $800M in 2022, and $850M for last year.
He said that the NBS is mandated to provide affordable mortgages to Guyanese, and is not necessarily a profit venture. As a result, they enjoy several interventions from the state, such as tax exemptions, that would not be afforded to other commercial banks.
He said that reducing the mortgage rates has saved tremendous funds, and the institution has performed spectacularly in reducing payments for over 14,000 Guyanese. This feat, according to Dr Jagdeo, is a success story.
“Kaieteur News looked at the $800-$850 million that was given back to the 14,000 people who now have mortgages at NBS…and claims that NBS lost this money because President Ali made an intervention to ask NBS to reduce mortgage rates further. President Ali, first of all, did not direct NBS to reduce mortgage rates,” the general secretary clarified.
He stressed that as a result of the rapidly expanding economy, the president has been advocating for lower mortgage rates, to empower Guyanese with more homeownership opportunities.
“When we took office in the 90s, a mortgage rate on a loan was ranging between 37 per cent to 40 per cent. It was impossible to borrow. So, people could not borrow to build. So, the PPP, when we got into office, we started [the work]. First, we tamed inflation rates, stabilised the exchange rate and mortgage rates started coming down, both for mortgages and commercial loans,” the GS explained.
Several other banking institutions are offering lowered mortgage rates, at the urging of the government, and through the creation of a stable macroeconomic environment. According to Dr Jagdeo, in many instances, the government engaged with banks and offered them incentives so that Guyanese could enjoy lower mortgage rates.
“We have de-risked a lot of the borrowing by allocating land and pledging the land to the banking institutions so that people who did not have collateral could then go and still secure a loan. Because of that, tens of thousands of people started owning homes in this country,” the general secretary noted.
He further explained, “We have been urging the banks to lower mortgage interest because we want people to own homes. We are supplying more house lots now as part of our manifesto promise, and we are working to ensure that mortgages become affordable. You have to do both at the same time.”
Addressing the contention that an alleged non-performing loans issue will extend to other financial operations, the general secretary made it clear that Guyana’s banking sector is resilient, and not at risk.
“We have stress-tested, more than most countries, our banking system. We have one of the toughest anti-money laundering laws anywhere in the world,” Dr Jagdeo pointed out.
Guyana’s anti-money laundering legislation was recently modified to meet the best-practised standards of the Financial Action Task Force (FATF).
The GS assured that Guyana has a stable banking system, and dismissed the article as a blatant lie.
“In 2019, non-performing loans in the banking system were 12.1 per cent. [Today], it is 2.7 per cent, across the banking system. So, [it is] contrary to what they have there. It is a total lie that it will affect other financial operators and banks,” he said.
Importantly, he underscored that the NBS has also reduced their non-performing loans from the COVID period, from about 10 per cent to approximately 3 per cent.