Left: Richard Powell, head of Victoria Mutual Building Society, No. 2 in the market. Right: Earl Jarrett, general manager of Jamaica National Building Society, No. 1 in the market.

Ashford W. Meikle, Business Reporter

Jamaica's two largest mortgage providers are now neck to neck on rates, both looking to corner new markets by offering 12.99 per cent 'sales' on home loans as new real estate developments from Negril to Kingston enter the market.

Just over a week ago, Victoria Mutual Building Society, headed by Richard Powell, announced it too would be offering a 12.99 per cent mortgage rate, to match a sale price that chief rival Jamaica National implemented in 2006.

The offer included 100 per cent financing for residential mortgages up to June 30 this year.

Almost immediately, Jamaica National, the country's largest building society with a mortgage portfolio of just under $20 billion up to September 2006 according to Bank of Jamaica statistics, shot back with a special mortgage window for women ? also offering 100 per cent financing for the purchase or construction of residential properties at 12.99 per cent.

The Earl Jarrett-led JN, whose mortgage rates for first time buyers was about 14 per cent prior to the sale, announced last Friday that processing fees would be waived for successful applicants who would benefit from free services within the JNBS group, including coverage of up to $200,000 if they insure the contents of their homes for a minimum of $1 million and have peril insurance with NEM, a Jamaica National subsidiary.

Payment holidays

Describing the product as the first of its kind in Jamaica, JNBS said that successful applicants would get two payment holidays over the course of the mortgage, at the beginning and anytime thereafter during the life of the loan.

Victoria Mutual, which describes its campaign as a "customer-centric approach to mortgages," insists that it isn't engaging in a price war.

"They are following what we are doing," VMBS' senior vice- president for group marketing, Michelle Wilson-Reynolds, told Wednesday Business last week .

"Our concern is not only for first time homeowners - it is extended to those who wish to purchase a second or third home," Wilson-Reynolds added in a press release issued yesterday.

The new VP, who left Capital and Credit last year to work with VMBS, said that Victoria Mutual's latest mortgage campaign was one up on Jamaica National since it offers content insurance for up to five per cent through its subsidiary Victoria Mutual Insurance Company and a 50 per cent discount on valuations done by VM Property Services.

In addition, eligible borrowers will get one year's free life insurance coverage up to $1 million.

Life of Jamaica also recently announced that it would be reducing its mortgage rate from 14.5 per cent to 13.5 per cent, while Scotiabank said last December that it would be establishing a $500 million mortgage fund at a fixed rate of 11 per cent for five years for civil servants.

"In a competitive industry in which we operate, each of us is trying to get our share of the market, would have to look into what we are offering," said Gavin Lowe, vice president of operations at VMBS.

Market share

"To be competitive, you price accordingly to get a share of the market."

The building society had a loan portfolio of over $14 billion to September 2006, according to central bank figures.

The first indication of the jockeying among the building societies started early last year when FirstCaribbean International Building Society (FCIBS) announced its intention to double its mortgage portfolio which then stood at just under $2 billion.

In fact, by October FCIBS - whose rate now stands at 13 per cent and ? had surpassed Scotia Jamaica Building Society (SJBS) as in third place of four building societies, recording a 70 per cent growth as it portfolio climbed to just over $4 billion.

SJBS, which has the highest rate among the building societies ? 17.5 per cent ? grew by just seven per cent in the year during that period. VMBS registered an eleven per cent growth, while JN grew in line with the industry, 23 per cent.

But, while the building societies compete among themselves with innovative products, there are still limitations and restrictions, as Wilson-Reynolds noted.

To access the special mortgage fund at SJBS, the applicant has to be a university graduate and in the case of FCIBS a lump sum deposit of $50,000 is required, which is hypothecated for three years, in addition to compulsory saving of about three per cent of the monthly mortgage payment.

ashford.meikle@gleanerjm.com