Milton Brady, managing director of FirstCaribbean International Bank Jamaica. - File

Ashford W. Meikle, Business Reporter

FirstCaribbean International Building Society (FCIBS) has vaulted its rival Scotia Jamaica Building Society to claim the third spot in the mortgage market by snatching business from the two top players and clinching joint venture deals with upscale condominium developments such as the Palmyra and Goldeneye.

Jamaica National and the Victoria Mutual building societies, respectively, remain in pole position, together accounting for about three-quarters of the market .

As at the end of its financial year, October 31, 2006, FCIBS had a mortgage portfolio of over $4 billion, an almost 70 per cent year-over-year increase, managing director of the building society's parent company FirstCaribbean International Bank Jamaica, Milton Brady, told Wednesday Business.

Scotia Jamaica's portfolio grew 11 per cent to $3.9 billion in the same period.

Partnering during development

"We take the approach of targeting the top developers and partnering with them. So, rather than selling individual mortgages to consumers, we partner with the developers during their sales and promotion," said Brady.

Compared to JNBS and VMBS, FirstCaribbean remains a minor player - up to the end of September last year, JNBS controlled almost 47 per cent of the country's private mortgage stock while VMBS accounted for 37 per cent - but its growth has outpaced the industry.

Central bank figures, which do not capture the mortgage stock of credit unions and companies such as Life of Jamaica, indicate that up to September 2006, the combined mortgages of building societies experienced a 22 per cent year-over-year growth, pushing the portfolio to $41 billion.

Up to that period, FCIBS, with a portfolio of $3.7 billion, was in last place among the four building societies.

Stacked individually, Scotia Jamaica had the lowest increase during the year - just under seven per cent, to about $3.8 billion - followed by Victoria Mutual Building Society, which grew its $14 billion portfolio by 11 per cent.

The country's largest building society, Jamaica National, which has a portfolio of almost $20 billion, had its debt stock increase in line with the industry - 24 per cent.

Part of FirstCaribbean's rapid growth can be attributed to the excitement it generated in the market last year when it fired off a salvo by lowering its interest rates.

Lowering rates

At a sliver below 13 per cent, these were the lowest in the industry, its summer campaign which saw the building society waiving some of its administrative loan costs for first time mortgagors and the lowering of the debt service ratio for potential borrowers.

Since then JNBS has responded with a 12.99 per cent mortgage sale and Scotia Jamaica has carved out an 11.99 per cent rate for a dedicated segment of its clientele.

New products

Brady also attributes FCIBS' rapid growth to two new products introduced last year, international mortgages - hard currency financing offered to non-resident Jamaicans and foreign currency mortgages offered to Jamaicans locally and overseas who earn foreign currency.

"You are looking at very high net worth individuals. As a matter of fact, most of these persons could afford to buy these properties for cash and so our credit risk is low because these customers are outside Jamaica and so they are not subject to [our] economic challenges," he noted of the international mortgages.

Issuing commitments

While Brady did not go into specifics about the business booked so far, by his own admission, the largest mortgage loan so far was a mortgage of almost US$2 million ($135 million) for a penthouse at the Palmyra condo development in Montego Bay.

"Right now, we are issuing a lot of commitments," he told Wednesday Business. "Our draw down so far is several million U.S. dollars but the biggest story is the undrawn commitments - we have a significant number of those."

ashford.meikle@gleanerjm.com