KINGSTON, Jamaica – Jamaica National Building Society approved more mortgages in March than for any other month over the past two years, says General Manager Earl Jarrett.
The organisation approved more than $800 million in mortgages for the month, he told a Realtors Association of Jamaica forum at the Terra Nova Hotel in St. Andrew on April 19. Mr. Jarrett said this came against the background of substantially increased competition in the mortgage market.
“We have seen the excitement in the market,” Mr. Jarrett stated. “It was said that the market was dead, but there is a price point at which people will enter.”
That price point was the 9.4 percent mortgage special which Jamaica National offered in March, as competition in the market came to a head towards the end of the fiscal year. This 9.4 percent mortgage was part of a general lowering of mortgage rates by private mortgage lenders, which saw rates plunging by more than 4 percentage points during the past two years.
Lending rates fell as after the Jamaica Debt Exchange (JDX) programme, instituted in 2010, transformed the country’s financial environment. The JDX programme involved the downward renegotiating of interest rates on government local debt, to reduce the repayment burden on the budget.
The fall in public sector interest rates resulted in the entry of new lenders into the mortgage market as it was, “offering a better return than that offered by the Government of Jamaica” he said. “I anticipate that over time, we will see even more players in the market.”
Mr. Jarrett suggested that the enhanced attractiveness of the mortgage market could result in the development of specialised organisations serving as mortgage originators. And, these entities could be separate and apart from mortgage lenders.
He also suggested that the National Housing Trust (NHT) could add to the development of the mortgage market by focusing on becoming a mortgage wholesaler. He said, “There is absolutely no reason why the National Housing Trust, the banks and building societies should be competing in the same space, establishing branches across the island to deliver retail mortgage services.”
General Manager Earl Jarrett, addressing a Realtors Association of Jamaica forum in Kingston on Thursday, April 19.
To improve overall service quality, the NHT could onlend its funds to the private sector, after setting the policy framework on which those funds could be loaned. He said similar mechanisms had been successfully applied in other countries.
“I am encouraged by the vibrancy of the competition in the housing finance market, which is now evident,” Mr. Jarrett declared. “As our economy becomes more normalised, we will see more players entering the marketplace and there will be greater options offered and greater customer care.”
