Dennise Williams, Staff Reporter
Tracey
"THE CORE of building wealth is homeowner-ship." Last Tuesday, managing director of FirstCaribbean International Bank (Jamaica) Limited (FCIB), Milton Brady, introduced 'Save and Win Towards Your Own Home' the newest promotion by FirstCaribbean International Building Society (FCBS).
According to the general manager of FCBS, Lenworth Tracey, "We at the building society are focusing on the mortgage product as an investment tool. And so this new product is loaded with benefits for customers. It is a win-win for the bank and savers."
FCBS hopes to attract new customers with monthly cash prizes and the chance to win $5 million.
Mr. Tracey told Sunday Business that he expects a 100 per cent growth in deposit base.
In fact, Mr. Tracey added, "Our only concern regarding this product is the ability of our bank to handle all the new business. But we will apply ourselves with diligence to this endeavour. "
BENEFITS
Additional benefits will be the reduction by half a per cent from mortgage and consumer loan interest rates. This will see mortgage rates dropping from 13.5 per cent to 13 per cent.
A special introductory rate of 29 per cent for new credit card applicants has also been thrown in. To participate, FCBS requires an opening balance of $5,000 and a balance of $20,000 to qualify for entry into the drawings.
The campaign is slated to run until June 2006, but Mr. Tracey hinted at extending the promotion based on market demand.
COMPETING ON SERVICE
Yet the question must be asked: Is this new promotion a way to take on the two dominant players Victoria Mutual Building Society and Jamaica National Building Society through offering low mortgage interest rates and cash prizes?
Mr. Tracey replied: "We are not competing on price but on service. We show our clients how to leverage real estate to create wealth. And we facilitate the refinancing of existing debt. It just so happens that we have the lowest lending rates in the industry right now."
Another point was that the interest rates on savings balances at FCBS range between 4.5 per cent to 7.5 per cent for amounts of $10,000 to
$1 million.
However, savings promotions by at least one of FCBS' competitors offer a similar interest rate as money market instruments.
To this point, Mr. Tracey replies: "We allow customers to hypothecate their savings at the building society for collateral at the commercial bank. Additionally, for savers seeking a mortgage, our rates for first-time homeowners are 13.5 per cent: Therefore, we cannot give savings interest rates of 13 per cent. We wouldn't make a spread."
According to the general manager, the building society's share of the mortgage market has grown from three to six per cent for the twelve-month period up to October 2005.
"We have experienced portfolio growth of 67 per cent against the industry growth of 27 per cent. That's a growth rate of 2.5 times our competitors."
