Sun | Jan 20, 2019

Mortgage market slumps after growth spurt

Published:Friday | April 17, 2015 | 12:00 AM

Mortgage loans had a resurgence in the final months of last year, but Planning Institute of Jamaica (PIOJ) indicates that the new business failed to pull the market out of a year-long slump, in which the National Housing Trust (NHT) was one of the biggest drags.

NHT, which has the largest slice of the mortgage market and dominates the low-income real estate market as a supplier of housing, recorded a 20 per cent slump in loan volume last year.

For the industry, inclusive of private mortgage providers, the number of mortgages written in 2014 fell by 22 per cent, from 17,308 to 13,428. The value of mortgages written also declined by nine per cent from $37.68 billion to $34.17 billion, according to PIOJ, whose data covered the mortgage operations of NHT, FirstCaribbean International Bank Jamaica, Jamaica National Building Society, Scotia Jamaica Building Society and Sagicor Life Jamaica.

Loan volume at NHT dropped by one-fifth from 7,916 to 6,324, while the value of mortgages written was down by 18 per cent from $21.7 billion in 2013 to $17.7 at yearend 2014.

A rise in mortgage volumes for the fourth calendar quarter of 2014 was not matched by a rise in loan value; instead values declined. Understanding why that happened would require socio-economic analysis, said an economist at the PIOJ.

"The data we provide on mortgages is solely from an economic standpoint," he said.

In the final quarter, while the total number of mortgages grew by 18.7 per cent to 3,098 loans, their value declined by 18.6 per cent to $4.27 billion.

In the period, the NHT saw fall-off in volumes of 17.7 per cent, or 337 fewer loans written than in the final quarter of 2013.

Industry performance for all of 2014 was a reversal of the prior year when total mortgages improved by $9 billion to $37.7 billion.

The PIOJ noted that this was influenced by the growth in the value of mortgages provided by the NHT, which in 2013 totalled $21.7 billion, an increase of 11.9 per cent relative to 2012.

Last year, NHT accounted for 47 per cent of mortgage volumes, up from 45.7 per cent in 2013, but its share of loans written slipped from 57 per cent to 52 per cent.