Ashford W. Meikle, Staff Reporter
BASED ON economic data from the Bank of Jamaica, there has been a decline in the number of mortgages granted by building societies during the third quarter of the year.
During this period - July to September - there was a seven per cent decline in the mortgages advanced which fell to approximately $1.8 billion. With a year to date inflation of seven per cent in both real and nominal terms there has been a decline on the sector. During the same period last year, $1.9 billion was disbursed. The central bank's figures are not unsurprising and supports similar figures published recently by the PIOJ.
DECLINE
The figures by the PIOJ point to a decline of almost two per cent in the finance and insurance services sector. And the PIOJ says that based on its calculations, it is forecasting a negative 1.4 per cent growth for the industry for the 2004 calendar year. The immediate reason for the decline in the sector's performance can be attributed to Hurricane Ivan. "Undoubtedly Hurricane Ivan did have an impact," Dr. Hughes said.
Like most finance companies, building societies did not cash in on increased business from Hurricane Ivan. In fact, there was a lukewarm response to the reconstruction loans offered by the building societies. "The take-up rates have been pretty low on the special recovery loans," remarked a senior executive at one of the building societies.
LACKLUSTRE PERFORMANCE
Financial experts conclude the lacklustre performance from the public is mainly a result of persons having a greater number of financial alternatives from which to choose.
Figures from at least one institution figure supports the national figures. Senior mortgage executive at the Victoria Mutual Building Society (VMBS), Frank Harrison told Sunday Business, "Loans in the second quarter of 2004 increased by 30 per cent over that of first quarter. In the third quarter, output fell by 11 per cent, compared with the second quarter, but I doubt that that would have been so had it not been for the intervention of the hurricane."
In spite of this however, Mr. Harrison believes the market will pick up because of a "combination of factors including, resurgence in the demand for real estate, particularly residential properties, driven by return of confidence in the country's economy, the intense competition among lenders and the reduction in mortgage rates."
According to the mortgage executive, the vast majority of loans are granted to purchase homes in the $2 million to $5 million region. He emphasised that "I believe we can look forward to continuing strong demand for loans at the VMBS."
| Period | 2003 | 2004 | Change |
| First quarter | 1,347,432 | 1,591,392 | 18 % |
| Second quarter | 1,311,111 | 1,600,108 | 22 % |
| Third quarter | 1,946,483 | 1,810,413 | (7) % |
