Wed | Jul 18, 2018

NCB aims to quadruple mortgage business

Published:Sunday | June 17, 2018 | 12:00 AMAvia Collinder
President of the Realtors Association of Jamaica Howard Jonson Jr (left) shakes hands with NCB Senior General Manager for the Retail Banking Division Brian Booth, at the launch of National Commercial Bank Jamaica’s Mortgage Realtors Incentive Programme, held at the NCB Wellness & Recreation Centre, Kingston, on June 14, 2018.

National Commercial Bank Jamaica is following other mortgage providers with an incentive programme for local realtors to go after a bigger slice of the mortgage loan market.

Although NCB is the largest lender in Jamaica, it is outperformed in the mortgage segment. The incentive programme would help it tap into the $17 billion in deals that the 900 members of the Realtors Association currently execute annually.

Brian Booth, senior general manager for NCB's retail banking division, said the programme, which runs from June to December, would offer the dealers a one per cent commission and a midterm prize at the end of September with the best performing realtor earning $250,000 and the best performing company earning $250,000.

At the end of December, the best performing realtor and company would each earn $500,000.

NCB estimates its share of mortgages to be about 10 per cent of market overall, "with the total private market in the ballpark of $160 billion, excluding the National Housing Trust," Booth said in an interview with the Financial Gleaner.

The company wants to quadruple its share to 40 per cent, which would align with its current share of the loan market in the banking system overall.

"Our aspiration is to grow our portfolio to reflect the ultimate overall position which we have in the market," he affirmed.

Across the banking system, NCB tops the pack of 11 institutions with a portfolio valued at $223 billion, according to industry data from the central bank for the period ending December 2017. Within the commercial banking sector, which has eight players, NCB holds a 37 per cent share of the loan market, based on the latest industry data.

Booth said at the launch of incentive scheme on Thursday that NCB entered the mortgage market formally in 2012 with rates in the single digits, and that the price now being offered to borrowers, 7.45 per cent per annum, was "among the lowest in the market".

Like other lenders, the bank has also partnered with state mortgage provider National Housing Trust on joint mortgage solutions.

 

INCENTIVE SCHEMES

 

Six months ago, JMMB Group announced its partnership agreement with the Realtors Association of Jamaica, RAJ, under which it offered an incentive for realtors on home loans. The grand prize is a dream vacation for the top realtor.

Through its banking subsidiary, JMMB also offered a special loan to RAJ members with special interest rates and criteria on motor vehicle loans, with up to eight years to repay; and a reduction on all processing fees, to one per cent. JMMB Bank, as at December 2017, had $25 billion in total loans.

JN Bank, which is considered the largest private mortgage lender with $77 billion in total loans, features a referral programme that encourages real estate professionals to refer persons who are interested in purchasing a property. The promotion gives the realtor the opportunity to win prizes, including a car, weekend getaways and tech gadgets.

Victoria Mutual Building Society, with a $44 billion loan portfolio, offers registered members of the RAJ, on each mortgage referral, one per cent commission and top prizes twice per year. Agents doing a minimum in $95 million worth of business can qualify for an all-expenses paid trip to Milan, Italy, Aruba, or any destination in the Caribbean.

The Global Property Guide report dated October 2017, quoted by NCB's Booth, said real estate sales in Jamaica is on the upswing.

The report said foreign investors dominate the high-end market, with vacation homes located in Montego Bay, Ocho Rios, and Negril, being in demand. Vacation homes are priced from US$800,000 to US$10 million, according to Global Property, which also noted that reduced interest rates and increased loan limits in some banks have beefed up housing demand, including townhouses, apartments and properties in gated communities.

avia.collinder@gleanerjm.com