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JNBS reduces mortgage rate amid trend

Published:Sunday | February 7, 2016 | 12:00 AMTameka Gordon
JNBS mortgage sales executive, Tiffany Gordon.

Mortgage leader Jamaica National Building Society (JNBS) has slashed it mortgage rates to 8.5 per cent in response to the shift in the market.

The building society, which now commands 52 per cent of the market, said its rate reduction will span all new mortgage applicants or its line of residential mortgage products.

Moving from 9.29 per cent, the new mortgage rate covers all five of JNBS's mortgage product lines, with a maximum loan amount of $20 million.

"The rate applies to home purchases, construction loans, both having 40-year repayment terms, as well as equity loans, refinance loans, and home-improvement loans," Mortgage Sales Executive Tiffany Gordon said.

Mortgage rates have been trending down with Sagicor Bank Jamaica and Victoria Mutual Building Society (VMBS) also offering single-digit rates.

"We had some competition that went down and we decided to match them," Gordon said, noting the need to remain competitive.

"We were not the leaders in doing it," but Gordon said the JNBS rate covers the entire life of the mortgage loan, and not just a period of the loan term as offered by others.

Industry data published by the Bank of Jamaica to September 2015 valued the residential mortgage market at $108 billion, however that data is confined to the building-society sector and does not take into account the business done by other financial institutions.

JNBS's residential mortgage portfolio was then valued at $54.8 billion, VMBS at $31.6 billion, and Scotia Jamaica Building Society $22.3 billion.

"We do almost $11 billion a year, (and) we are almost on target for that," Gordon said, in relation to the writing of new business. JNBS said it had written $7.4 billion of loans so far this year.

The mortgage-rate reduction comes amid plans for the country's largest building society to complete its transition to a commercial bank. This change should take effect "possibly prior to the beginning of the new financial year," the company said.

The building society got approval last October to convert to a bank. JNBS and its 11 businesses are to be placed under the umbrella of three different holding companies as the society makes its transition.