Jamaica
News - Real Estate - Finance
Source: Jamaica Gleaner, Ashford Meikle, February 21, 2007)
FirstCaribbean grows
mortgage portfolio, claims new market
FirstCaribbean International Building
Society (FCIBS) has vaulted its rival Scotia Jamaica Building Society to claim
the third spot in the mortgage market by snatching business from the two top
players and clinching joint venture deals with upscale condominium developments
such as the Palmyra and Goldeneye.
Jamaica National and the Victoria Mutual
building societies, respectively, remain in pole position, together accounting
for about three-quarters of the market .
As at the end of its financial year, October 31,
2006, FCIBS had a mortgage portfolio of over $4 billion, an almost 70 per cent
year-over-year increase, managing director of the building society's parent
company FirstCaribbean International Bank Jamaica, Milton Brady stated.
Scotia Jamaica's portfolio grew 11 per cent to
$3.9 billion in the same period.
Partnering during development
"We take the approach of targeting the
top developers and partnering with them. So, rather than selling individual
mortgages to consumers, we partner with the developers during their sales and
promotion," said Brady.
Compared to JNBS and VMBS, FirstCaribbean remains
a minor player - up to the end of September last year, JNBS controlled almost 47
per cent of the country's private mortgage stock while VMBS accounted for 37 per
cent - but its growth has outpaced the industry.
Central bank figures, which do not capture the
mortgage stock of credit unions and companies such as Life of Jamaica, indicate
that up to September 2006, the combined mortgages of building societies
experienced a 22 per cent year-over-year growth, pushing the portfolio to $41
billion.
Up to that period, FCIBS, with a portfolio of
$3.7 billion, was in last place among the four building societies.
Stacked individually, Scotia Jamaica had the
lowest increase during the year - just under seven per cent, to about $3.8
billion - followed by Victoria Mutual Building Society, which grew its $14
billion portfolio by 11 per cent.
The country's largest building society, Jamaica
National, which has a portfolio of almost $20 billion, had its debt stock
increase in line with the industry - 24 per cent.
Part of FirstCaribbean's rapid growth can be
attributed to the excitement it generated in the market last year when it fired
off a salvo by lowering its interest rates.
Lowering rates
At a sliver below 13 per cent, these were the
lowest in the industry, its summer campaign which saw the building society
waiving some of its administrative loan costs for first time mortgagors and the
lowering of the debt service ratio for potential borrowers.
Since then JNBS has responded with a 12.99 per
cent mortgage sale and Scotia Jamaica has carved out an 11.99 per cent rate for
a dedicated segment of its clientele.
New products
Brady also attributes FCIBS' rapid growth to two
new products introduced last year, international mortgages - hard currency
financing offered to non-resident Jamaicans and foreign currency mortgages
offered to Jamaicans locally and overseas who earn foreign currency.
"You are looking at very high net worth
individuals. As a matter of fact, most of these persons could afford to buy
these properties for cash and so our credit risk is low because these customers
are outside Jamaica and so they are not subject to [our] economic
challenges," he noted of the international mortgages.
Issuing commitments
While Brady did not go into specifics about
the business booked so far, by his own admission, the largest mortgage loan so
far was a mortgage of almost US$2 million ($135 million) for a penthouse at the
Palmyra condo development in Montego Bay.
"Right now, we are issuing a lot of
commitments. Our draw down so far is several million U.S.
dollars but the biggest story is the undrawn commitments - we have a significant
number of those."
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