COK targets savers with cheap mortgage

COK Sodality Co-operative Credit Union Limited is now offering preferred mortgage rates to savers, announcing last Friday that its shareholders can now access 90 per cent mortgage financing, at 10 per cent, for amounts up to J$25 million.

The new offer is the latest in a round of mortgage cuts by financial institutions, the lowest being from GSB credit union which has cut rates twice since March and now offers home loans at 9.58 per cent.

Jamaica National Building Society (JNBS), the leader in the mortgage market, in August began offering new rates, ranging from 11.49 per cent to a minimum of 9.8 per cent for applicants who have at least 10 per cent of a combined gross salary in a JNBS savings account.

The new COK Sodality loan facility, called Home Ownership Made Easy (HOME), is for 25 years and available to members who have amassed an amount equal to "the minimum percentage share amount required" for the HOME loan.

Minimum not disclosed

This minimum share amount needed to qualify for the loan was not disclosed. For members who have not reached the minimum saving, the mortgage rate offered is 12.5 per cent interest.

COK General Manager Jacqueline Mighty was not available for comment, but earlier this year had said that a first-time sale of deferred shares in the credit union was to facilitate entry into the mortgage market

The successful J$300 million offer in July consisted of shares redeemable in five years.

COK said in a release that that new members who are willing to deposit the minimum percentage share amount could qualify for the 10 per cent mortgage interest rate.

COK said it has compressed the closing costs attached to new mortgages to 4.5 per cent; and that commitment, legal and processing fees have been combined within a range of 2.5 per cent to 4.0 per cent of the loan amount.

The credit union is banking on a Ministry of Water & Housing disclosure of a 15,000 annual demand for mortgages to spur demand for its new home loan product.

"COK Sodality is of the view that with a reduction in the rates on mortgages to about 10 per cent, effective demand for mortgages should increase. Also, with the drastic reduction in charges when transferring mortgages of the same size between financial institutions, more consumers would be seeking to be homeowners," said Mighty, who was quoted in the COK release.

austanny@yahoo.com