Government will subsidise low income D.F.C. mortgages

Yesterday it was free fill in Port Loyola; today’s pre-election bonus is a big break on your mortgage. According to a release from Cabinet, that body has decided to subsidise all those people paying D.F.C. housing loans of less than thirty-five thousand dollars. That subsidy will be one hundred dollars per month. According to the release, a total of one thousand, six hundred and twenty-four borrowers qualify for the assistance and they will be informed shortly as to how the details will be worked out. And while those low income borrowers will no doubt rejoice, it is the details of the programme’s costs that may need some explanation. To clarify matters, the thirty-five thousand dollar figure is the amount of the original loan, not the current balance. Also, if you were approved for a loan broken into two parts, it is the total amount that must fall below thirty-five thousand for the subsidy to apply. And what about the cost to taxpayers? One hundred dollars a month times one thousand six hundred and twenty-four equals one hundred and sixty-two thousand four hundred dollars per month, or one million, nine hundred and forty-eight thousand dollars per year. It sounds doable, but when you multiply that figure by an average loan life of around fifteen years, you come up with a cost of twenty-nine million, two hundred and thirty-two thousand dollars in lost government revenue. Where will that money come from? The politicians will tell you that it’s a purely paper transaction, because the D.F.C. owes government over fifty million dollars, so they just deduct the twenty-nine from the fifty. But what would have happened to the hundred a month if it had been paid? A good portion would have gone to repay the superbond, as many of those mortgages were included in the various securitizations that have been refinanced under the bond, so that money must be found somewhere. And that’s not the only problem. Many of those sixteen hundred eligible mortgages are in arrears or non-performing. To qualify for the subsidy will they have to be brought up to date? And if so, how? Will those funds also come from government? And finally, having shown its willingness to ease low income borrowers in an election year, what is the message to other people who owe D.F.C.? Does it really make sense to pay your money today when tomorrow there’s a chance that your debts will be written off by an increasingly generous Cabinet? Don’t hold your breath for answers as it’s clear that Belize is in election mode … and if a problem won’t be felt in the next eight months it’s not worth worrying about. Except by the taxpayers, who are stuck no matter who wins or loses.