How Project Bonds Could Plug The Potential Gap In GCC Infrastructure Financing points
out that the recent Ruwais Power Co.
Two-thirds of those builders who reported using incentives are including optional items at no cost, a third are absorbing financing points
, and two-thirds are paying closing costs or fees to bolster sales.
Lenders will be prohibited from financing points
and fees that exceed 5 percent of the loan amount in connection with the closing of the loan.
In order of importance, the incentives were as follows: including optional items in homes at no cost (41 percent); paying closing costs (31 percent); paying up-front financing points
(15 percent); and buying down mortgage interest rates (8 percent).
The study found that 28 percent of builders were including optional items in their homes at no charge, about 17 percent were paying closing costs or financing points
, and some companies had begun to "buy down" mortgage interest rates.
No financing points
or application fees are necessary and there are no prepayment penalties.
About 70 percent of builders rated the payment of closing costs or financing points
as "somewhat to very effective" techniques, and about half said that interest rate buy-downs were effective in maintaining sales.
The larger firms are more likely to pay closing costs or financing points
for buyers, and nearly one-fifth have been buying down mortgage interest rates.