JN drops upkeep savings on mortgages

Wednesday, September 07, 2011

JAMAICA National Building Society (JNBS) has completely dropped the upkeep savings component of its mortgages while another industry player ponders whether to take a similar initiative, as lenders explore ways to make loans more serviceable in a difficult economic climate.

JNBS, the largest building society in Jamaica, told the Business Observer that it took a decision at the start of this year to phase out the upkeep savings component of monthly mortgage payments on existing accounts to ease the repayment burden of mortgagors.

"This is a positive change," said Wanica Purkiss, JNBS mortgage and operations executive. "It allows for easier loan servicing and leaves more options in the hands of mortgagors," she added.

Purkiss said that mortgagors used the funds in these accounts to carry out repairs or upgrades to their properties, as well as to settle loan accounts. She pointed out that the upkeep savings component on new mortgages was discontinued from January of 2009.

JNBS once included upkeep savings at a level of $1.00 per $1,000 of the loan amount, but this was later reduced to $0.50 per $1,000 and then to $0.25 per $1,000. These sums were payable monthly.

Purkiss said currently, with the complete phasing out of the upkeep account, members of JNBS can transfer the funds to another savings account, and maintain their savings pattern or choose another option which suits them.

FirstCaribbean International Building Society is currently reviewing its upkeep savings measure of $0.50 per $1,000 in its mortgages.

"It's currently under a review because of what's happening in the market," said FCIB district manager Robert Wright, alluding to the weak domestic economy which has impacted mortgagors.

Wright said that the company will, however, take a cautious approach because "the fact is, some customers do find it a useful source of savings".

Victoria Mutual Building Society did not respond to a Business Observer query up to press time while Scotia Jamaica Building Society general manager Gladstone Whitelocke was said to be unavailable.

The most updated statistics released by the Bank of Jamaica show that non-performing loans — loans unserviced for over 90 days — among the four local building societies were $5.5 billion or 6.4 per cent of gross loans at the end of March 2011, around the same level at the corresponding period last year.