Loan payments halved for a year under relief plan

PUBLISHED : Tuesday, 17 February, 2004, 12:00am
UPDATED : Tuesday, 17 February, 2004, 12:00am

Recipients of the government's interest-free housing loans who have trouble meeting repayments will be allowed to halve their monthly payments for one year, according to a Housing Authority proposal.

The scheme was part of a package of relief measures to be discussed on Thursday by housing officials to help those in financial hardship, an authority source said.

Under the plan, the unpaid half of the payments would be spread over the remaining loan period.

The government's interest-free housing loan scheme allows a person to borrow 30 per cent of their mortgage from the Housing Authority and the rest from a bank. The government portion is interest-free.

Applicants wanting their repayments halved for a year would have to secure an agreement from the bank to allow its portion of the loan to be refinanced. They would also have to prove that their income had dropped at least 15 per cent from the time the loan was approved.

'Compared with the size of the loan scheme, default and delinquent repayments are not a very serious problem, but we think this is a problem we should not ignore,' the authority source said.

'If the situation gets worse and more people give up repaying their loans, the financial status of the authority will be further strained.'

The authority administers 42,000 housing loans. Up to September, about 1,700 scheme recipients regularly failed to repay their loans on time.

The authority source estimated that half of these recipients could qualify for the loan payment relief, which would cost the authority about $4 million, mainly on income it could have earned on the repayments during the deferral period.