Tue | Feb 25, 2020

Downswing in mortgage market

Published:Friday | October 27, 2017 | 12:00 AMAvia Collinder

The total value of mortgages for the June quarter was down 10.6 per cent to $9.2 billion, relative to the corresponding quarter of 2016.

The numbers exclude disbursements by Jamaica Mortgage Bank Limited, which finances large development projects.

The Planning Institute of Jamaica, PIOJ, indicated on Thursday that the lower value of mortgages was "due to a decrease in the value of disbursements by all institution categories", with the exception of life insurance companies, which also lend money for home acquisition.

The planning agency noted, however, that housing construction and mortgage loans from non-traditional lenders in the sector - commercial banks and other deposit taking institutions - were on the rise.

The PIOJ said in a document on housing and construction developments, shared with the Financial Gleaner, that mortgages disbursed by building societies were down 20 per cent to $4.03 billion in the June quarter; National Housing Trust, NHT, disbursements also declined by 2.1 per cent to $5.12 billion; but life insurance companies were up 113.2 per cent to $48.7 million.

The agency said the data includes Jamaica National, which transitioned from the building society sector to commercial banking in February 2017.

The total number of mortgages disbursed also fell by 89 loans to 2,013 loans in the quarter, PIOJ said. This performance was attributed mainly to the decline in the volume disbursed by all institution categories, with the exception of life insurance companies and NHT.

The largest fall off in the quarter affected building societies, which wrote 105 fewer loans with a total for the period of 412 loans. The NHT itself saw an increase of 15 loans, rounding off total mortgages granted in the period to 1,596 loans. The total for mortgage companies for the quarter was six loans, representing an increase of one year-over-year.

The downswing in the mortgage market comes amid vibrant construction activity and projections that housing demand is rising. The PIOJ noted that commercial bank loans to the housing construction and home ownership sector had climbed within the quarter, from $26.7 billion at the end of March to $28 billion at the end of May.

In 2016, loans to the sector in the same periods amounted to $23.7 billion and $25.4 billion, respectively.