The Bank of Jamaica (BOJ) has increased rates repeatedly since the start of 2022 in a bid to arrest inflation. However, mortgage lenders appear to be taking a long-term outlook and so far are holding lending rates steady.

Private lenders rates for home purchase currently range from 7.99 per cent to 10 per cent per annum. The central bank on Thursday last announced an increase of 50 basis points on its benchmark rate to reach five per cent.

So far, two commercial banks, Sagicor and Jamaica National, have said they will hike lending rates, but nothing has been said about long-term lending for housing.

Courtney Wynter, general manager of the Jamaica Mortgage Bank (JMB) said that, based on residential mortgages insured through the body’s Mortgage Indemnity Insurance (MII) programme, “we have not seen any interest rate movements from the FIs [financial institutions] since the BOJ policy rate increases”.

Mortgage indemnity insurance enables private lenders to increase the sum loaned up to 97 per cent of home value. Wynter said the lenders may be patiently waiting for further indications of what might affect their financing posture.

“I can only assume that the mortgage lending FIs are taking a wait-and-see posture with the assumption that the BOJ increases are transitory.”

The company head noted, however, that global conditions may cause a change.

He stated, “Given the worldwide projections around consumer goods price increases and demand for salary increases, all attributable to the pandemic and the Ukraine-Russia conflict, we anticipate the current inflationary trend to continue in the medium term.”

Wynter concluded, “As such, the JMB would not be surprised to see some upward movement in the mortgage rates in the medium to long term. Similarly, construction financing rates may follow the same trajectory.”

Total mortgages held by 11 members of the deposit-taking sector — including eight commercial banks, two building societies, and one merchant bank — increased from $257.8 billion at year end 2020 to $306.9 billion at the end of 2021, according to the BOJ, a 19 per cent improvement.