Data provided by the Planning Institute of Jamaica indicates that the number and value of mortgages held by the National Housing Trust (NHT) — the largest lender of home loans — has been in decline since 2013, cresting at $21.6 billion in that year, then sliding to $17 billion in value in 2015.

In a bid to revive demand, rates were cut drastically in mid-2016, with zero per cent interest offered to new home buyers with a weekly income of $12,000 and under.

For those earning a higher income, the maximum rate is four per cent for new home acquisition.

Some private mortgage lenders have also cut their rates and report that sales are up, especially in the higher income bands. The jury is still out for the NHT, with 2016 data still to come.

Courtney Wynter, general manager of the Jamaica Mortgage Bank (JMB), told the Jamaica Observer that overall demand is on the upswing.

“Since the introduction of the JMB’s 97 per cent MII (mortgage indemnity insurance) product in late 2015, we have seen the mortgage market move to a 95 per cent loan to value ratio.

“Additionally, NHT loan increases to $11 million per couple have helped to drive competition and may have moved the market to an average mortgage rate of 8.45 per cent,” he observed.

Jamaica National Bank (JNB, formerly the Jamaica National Building Society) told the Business Observer that many prospective homeowners face the challenge to source afford the deposit (required for home purchase).

In order to cope with this challenge, some lenders have increased their loan limit of 85 and 90 per cent to 95 per cent of the lower end of the purchase price or the market value of the property.

Historically the largest private lender, JNB said that over the past three years the base rate has been reduced from 9.4 per cent per annum to 8.5 per cent per annum. This is in response to market conditions.

In responses channelled through its communications department, the Bank said that cuts were made primarily to increase access to mortgage financing, thus increasing effective demand.

Notably, JNB observed, the National Housing Trust over the past year has also increased their loan ceiling from $4.5 million to $5.5 million (this increase is specific for new builds and construction loans).

Therefore, under the Joint Financing Mortgage Programme maintained with JN Bank, the borrower/ mortgagor can afford a larger loan at a lower rate.The result is that effective demand has increased due to lower interest rates and higher loan to value ratios.

For JNB, the home price categories showing the most growth are those in the price range of $25 million and under, while those with the least growth are above $40 million.

According to this housing lender, factors affecting demand for new mortgages are on the negative side — the impact of the increase in house prices — which exceeds the rise in the income of prospective homeowners.

There is also the constraint of the number of affordable units being built in preferred areas where people work, or within reasonable commuting distance from work.

On a positive note, JNB said, demand has been affected by increased public education about the benefits of homeownership (better to purchase than rent) and at an earlier stage.

Demand is also up, due to increases in NHT lending limits, higher loan-to-value ratios, more creative packaging of loans by lenders, which sometimes results in concessions on fees that make it easier for people to access loans, and across-the-board lower rates of interest on loans.

BNS Jamaica Ltd (Scotiabank) told the Business Observer that over the last three years there has been a consistent reduction in mortgage rates, with special campaign rates for certain periods.

Accompanying their initiative, they said, there has been a consistent increase in demand for mortgages over this period. In addition, mortgages have become more portable and so more and more customers are moving from one institution to another.

Scotia notes that with lower interest rates within the financial institutions and NHT, a larger percentage of individuals are getting loans from both NHT and financial institutions, and the customers are finding it easier to qualify for the mortgages.

“For our institution there has been a greater demand for units in the $20 – $25 million range. There has also been an increase in the demand for townhouses and apartments and gated communities for security reasons and communal living,” the bank said.