Choice Home Loan (CHL) clients of the Fiji Development Bank have a reason to smile with the reduction of interest rates on its home loan facility.
The Board in its meeting earlier this month agreed to a further reduction of 1 percent to residential (owner-occupier and investment property) loans with effect from 1st February 2013.
The 1% reduction applies across the board for the variable interest rate home loans and impacts as follows:
- Residential Owner Occupier from 8.75% to 7.75% per annum variable.
- Residential Investment or for Rental from 9.25% to 8.25% per annum variable and;
- Line of Credit (LOC) from 11% to 10% per annum variable.
“High interest rates is the result of high cost of funds and tight liquidity and this affects a lot of our home loan clients with repayments high accordingly,” says FDB CEO Ratu Deve Toganivalu.
“The reduced interest rates will result in a reduction on the repayment and hopefully this will alleviate some of the hardships faced by many of our clients.”
FDB introduced ahome loan product in 1990 to diversify its portfolio and assist the construction sector by providing an additional source for financing for housing. The Bank halted this product in 1996 when as a result of high interest rates and stiff competition from other home loan providers.
In 2004 the Bank re-entered the market with the CHL product allowing people to purchase a home for themselves (owner-occupier) or purchase a home/flats as an investment property (for rental). Included in this product also was an LOC, an extension to the home loan facility which allowed the borrower to take a personal loan.
A directive from the Minister of Finance in January 2008 led to the suspension of the facility as the lending focus of the Bank changed to what is now described as the Focused and the Non-Focused Sector.
As at 26 February, 2013, FDB had 645 accounts valued at $31.22MM in its home loan portfolio.
Meanwhile,the Board also agreed for the Bank to seek government’s approval to re-introduce the CHL product and leasing facilities to cushion the risks associated with lending to the high risk resource based agricultural sectors.