Finance Minister shares plans for 4% housing loan and affordable vehicle loans amid ESP rollout

During the Question Hour session, the Nanong-Shumar Constituency MP, Yeshey Jamtsho, raised a question regarding the lifting of the loan moratorium.

MP pointed, “The ruling government has pledged to increase the loan-to-value (LTV) mortgage ratio for home and apartment purchases or house construction from the current 70 percent to 95 percent in consultation with the Royal Monetary Authority (RMA), along with a lower interest rate of 4 percent. “

Additionally, the government plans to raise the debt equity for vehicle purchases, such as taxis and trucks, from 50 percent to 80 percent, which would benefit lower-income individuals by reducing their equity share contribution.

MP Yeshey Jamtsho inquired about the government’s plan and progress in delivering these low-interest rate housing and transport loans, including which bank will handle these loans, the source of funds, and the timeline for implementation.

In response, Finance Minister Lekey Dorji stated that during the State of the Nation address, the Prime Minister highlighted the critical issue of emigration, with 64,000 people, or 9 percent of the population, leaving the country.

Lyonpo emphasized, “Ensuring home ownership is a key solution to this problem. Under the new scheme, Financial Institutions will extend home loans up to 90 percent of the home’s or apartment’s value. The government, through the Economic Stimulus Programme (ESP) Secretariat, will establish guidelines to provide affordable credit for home loans at a 4 percent interest rate, with a long-term tenure of 30 years.”

For vehicle loans, particularly heavy vehicles and public transport, the government will implement special schemes through the ESP, as pledged.

The current LTV ratios for vehicle loans are 50 percent for heavy trucks, 70 percent for electric vehicles and public buses, and 30 percent for all other vehicles.

Lyonpo Lekey Dorji also shared that the RMA is currently reviewing these LTV ratios to make adjustments as needed.

With the moratorium on house construction loans lifted in July, and vehicle import loans to be lifed in August, people are eagerly awaiting the opportunity to obtain loans and purchase vehicles.