“Government’s mortgage plans will increase debt levels and risk driving a wedge between the public and private sectors,” Pat Gordon-Pamplin, the OBA Finance spokesperson in the House said today.
“Finance Minister Curtis Dickinson said in his Budget that the Government would ‘in conjunction with private sector banks, pilot a mortgage guarantee programme in return for a reduction in interest rates charged to Bermudians for their mortgages’,” she said.
“He also said the Government ‘will create a government-backed mortgage lender to relieve pressure on public sector employees by providing them with reduced mortgage rates.’
“Helping Bermudians buy a piece of the rock is not a bad aim and could help a sector where prices are steadily falling leaving people in negative equity, however this plan again raises so many unanswered questions which need addressing before it can be implemented.
“Like other loans, mortgages are based on a borrower’s ability to repay, if they cannot then the mortgages get into trouble.
“This plan could easily be an invitation to banks to lay off their impaired mortgages onto the taxpayer. Will Government put systems into place to stop that happening? What happens the if the homeowner defaults on the debt?
“In addition, how does Government intend to administer this plan? Will it involve taking more people onto the Government payroll? Or will they actually manage to make do with existing resources?
“One of the most troubling proposals contained in the Minister’s budget statement is that ‘Government will create a government backed mortgage lender’, to provide mortgages to civil servants.
“What happens if a person leaves the civil service and why does this government seem fit to use the taxes paid by everyone to benefit only the civil service?
“Government’s tactics risk driving a big wedge between the civil service and Bermudians employed in the private sector who are already suffering from more taxation.
“And when the Minister says that there will be a government backed mortgage lender, the question is: with what? Government is a net debtor to the tune of almost $2.5bn. Is it the Minister’s intention to use more borrowed money to fund this idea?
“This appears to be more of an Opposition-style vote winner than a seriously attainable policy.”