Dear Editor,
I write to thank Mr. Ravin Singh for his response (“Duncan misunderstood government’s new mortgage policy”, Jan 29). While intended as a rebuttal, Mr. Singh inadvertently confirmed my two central warnings.
First, on Inflation: Mr. Singh admits the new $30 million ceiling “reflects market alignment amid rising construction costs.” This is a confession. The government admits that under its watch, the cost of a basic low-income home has skyrocketed. But instead of using our oil wealth to subsidize materials and bring costs down, they are authorizing the poor to borrow more. They are financing inflation, not solving it.
Second, on Affordability: Mr. Singh accuses me of using “sociological labels.” Let us stick to the math.
A $30 million mortgage, even at concessionary rates, requires a monthly debt service of approximately $150,000. For a bank to approve this (based on the debt-to-income ratio Mr. Singh cites), the household usually needs to earn double that amount. Therefore, this “Low Income” ceiling is targeting households earning $300,000+ per month.
Editor, since when is a household earning $300,000 considered “Low Income” in Guyana? By stretching the definition of “Low Income” to include the middle class, the government is gas lighting the actual working poor, the teachers, police officers, and sales clerks, who cannot dream of servicing a $150,000 monthly debt.
Third, on the Banks: Mr. Singh boasts of the banks’ record profits to disprove “lender fatigue.” He misses the point. Banks are profitable precisely because they manage risk intelligently. If the commercial banks were truly eager to fund these schemes, the government would not need to expand the Low-Income Mortgage Programme to include insurance companies. In a free market, capital chases good investments. The government’s decision to bring insurance funds into the mix signals that traditional banks are reaching their risk limit on housing schemes where titles are slow and infrastructure is missing.
Mr. Singh calls this “modern housing finance.” The 28,000 Guyanese holding allocation letters for unserviced land call it what it is: a debt trap.