The National Housing Trust (NHT) has funnelled $1.1 billion to private banks to subsidise its External Financing Mortgage Programme (EFMP), a move that effectively outsources its mortgage book to protect a multibillion-dollar housing construction budget.
The contributor-funded state-run entity is projected to pay a further $1.3 billion in interest to financial institutions for the 2025-26 fiscal year, it disclosed, following a Sunday Gleaner query.
At the same time, it said financial institutions participating in the three-year-old EFMP have disbursed $33.73 billion as of December 2025, with the NHT betting on a subsidy-first approach.
It said the cost of paying these rate gaps is lower than the long-term benefit of diverting its own liquidity into massive housing construction projects.
“This model enables the Trust to leverage private sector liquidity, expand housing delivery, and maintain the affordability of NHT mortgage benefits for contributors,” NHT said.
The NHT has processed 232,657 mortgages since inception.
Under the current framework, anchored by agreements signed with 16 financial institutions, NHT has outsourced the underwriting and administration of loans for higher-income earners to the private sector. It claims a zero-cost processing fee structure even as it manages the widening spread between market rates and concessional contributor benefits.
Contributors earning above $30,000.99 per week must apply for a mortgage through NHT’s private partners, with the Trust paying the difference in interest rate. NHT rates run from 0 per cent to 5 per cent, while its financial partners’ rates range from approximately 8.5 per cent to over 13 per cent.
Approximately 50 per cent of NHT contributors fall within income categories that access their mortgage benefit through an external financial partner.
The Trust said it will process the mortgage of any contributor refused financing by its partners.
NHT contributions totalled $78 billion for the 2024-25 fiscal year and are projected to increase to approximately $80 billion for 2025-26.
In its 2023-24 annual report, the NHT said it received $56.5 billion in contributions, while maintaining total assets of $378.8 billion.
For that year, it sent 2,228 referrals to the participating institutions under the EFMP. Of this amount, 463 loans were disbursed at a value of $4.2 billion. It said the remainder would have been processed in the next financial year.
Still, while the NHT has maintained that the billions in private liquidity unlocked by the programme are a win for taxpayers, critics and fiscal watchers are questioning the long-term cost of this model.
With interest payments to private partners projected to increase this fiscal year, NHT is now tied to the volatility of market interest rates, raising concerns that a prolonged high-interest environment could turn its primary vehicle for affordable housing into a permanent revenue stream for commercial banks.
NOT STRANGE
But economist Keenan Falconer notes that the EFMP effectively decouples mortgage financing from construction financing, pointing out that the arrangement is not dissimilar to other models worldwide where the state housing agency outsources the underwriting of some of the mortgage financing component to private financial institutions.
He said most of this mortgage segment would be for contributors in the upper income bracket who want to apply for properties on the open market and that cost above the NHT’s loan limits.
“Consequently, the financial institutions assume administrative responsibility for the mortgage, which reduces the NHT’s burden in this respect enabling them to direct more focus on the construction financing aspect for low-income housing developments,” said Falconer.
The NHT said it has over 40,000 housing solutions at varying stages of the construction process, without responding definitively to Sunday Gleaner queries about the number of new developments it has spearheaded since the implementation of the programme.
In his contribution to the 2026-27 Budget Debate, Prime Minister Dr Andrew Holness disclosed that approximately 10,700 units are currently under construction.
He said nearly 6,000 are at the contract award stage, over 11,500 in procurement and negotiations, and more than 11,600 in the planning and design phase.
Falconer said the arrangement is “optimal” for the NHT, the borrowers, and the financial institutions because the NHT then gets to retain liquidity, which could improve their cash flow and channel more resources into the construction financing aspect, while financial institutions handle the “administrative complexity” involved in discharging mortgages from non-core contributors to the NHT.
Currently, he said the NHT does not employ its own builders or developers, stating that construction is mainly constrained by current market conditions, where personnel are insufficient to satisfy current demand, rather than a lack of financing.
“The NHT’s increase in liquidity from the arrangement can, however, be used to provide subsidies for low-income earners. But for the supply gap in the housing market to be ultimately filled, the current mismatch between construction capacity and financing would need to be addressed at a wider policy and operational level beyond the scope of the NHT in order to get more builders and developers to the market,” he said.
NHT’S KEY ROLE
Under fixed EFMP agreements, copies of which The Sunday Gleaner obtained through Access to Information, NHT’s primary responsibilities include determining contributor eligibility and issuing referral letters that outline the specific parameters, interest rates and loan ceilings for each applicant.
NHT is also obligated to make direct payments to financial institutions, which represent the monthly amortised loan payment differential between the agreed-upon programme rate and the contributor’s actual applicable interest rate. The payments are expected to continue until the loan reaches maturity, is settled, or is otherwise refinanced.
In turn, the financial institutions are tasked with processing mortgages according to its own underwriting criteria, while ensuring compliance with the service standards and loan limits specified in the NHT’s referral letters.
The financial institutions accept the relevant risks associated with these loans and must provide regular reports and information to the NHT as required by the agreement.
Additionally, the agreement includes provisions for principal shortfalls, where the NHT compensates financial institutions if a beneficiary’s loan is closed early due to refinancing or the exercise of a power of sale.
Under Clause 4.11 of the agreement, the NHT is specifically obligated to compensate the financial institutions for this shortfall under certain conditions.
It said compensation is required if a beneficiary’s loan is closed early due to refinancing, early payoff, and the financial institution exercising its power of sale.
Further, if the NHT fails to remit a direct payment or any other required payment to the financial institution when due and does not remedy this within 14 days, interest will accrue on the overdue amount.
The default interest is set at 2 per cent per annum above the programme rate from the original due date until the payment is received.
Under the fixed agreements financial institutions use residential mortgage portfolio rate, while under variable agreements the standard local currency mortgage rate is used with explicit reference to the Bank of Jamaica’s policy rate.
Variable agreements also include specific financial handling requirements. They mandate that the NHT’s subsidy prepayment must accrue interest for the Trust’s benefit at the partner’s savings rate, a detail not specified in the fixed-rate documents seen by The Sunday Gleaner.
The Trust said it ensures service quality and efficiency by monitoring processing timelines and key performance indicators.
NHT did not respond directly to whether a formal study had been conducted to compare the long-term administrative cost of the EFMP versus the previous in-house Joint Finance Mortgage Programme, noting instead that the programme allows it to leverage private sector liquidity for mortgage financing among other things.
Additionally, the Trust did not respond to a Sunday Gleaner request for a breakdown of the $1.1 billion paid in interest so far to financial institutions.
kimone.francis@gleanerjm.com
Partner Type
COK Sodality Co-Operative Credit Union FIXED
National Commercial Bank Ja. Limited FIXED
Bank of Nova Scotia Ja. Limited FIXED
Victoria Mutual Building Society VARIABLE
JN Bank VARIABLE
First Global Bank VARIABLE
JMMB Bank VARIABLE
Sagicor Bank VARIABLE
Sagicor Life VARIABLE
CIBC Caribbean VARIABLE
Cornerstone Trust & Merchant Bank VARIABLE
JPS Co-Operative Credit Union VARIABLE
Grace Co-Operative Credit Union VARIABLE
First Regional Co-Operative Credit Union VARIABLE
Jamaica Police Co-Operative Credit Union VARIABLE
First Heritage Co-Operative Credit Union VARIABLE
Trelawny Co-Operative Credit Union VARIABLE