Jul 2011 Financial News

RBC Jamaica enters mortgage market

Jul 22, 2011

RBC Royal Bank Jamaica, the third-largest bank by assets, has entered the conventional residential mortgage market, targeting the middle to upper-income segment after delaying the launch of the service for more than two years to finalise rebranding of the former RBTT Bank.

Loans will be capped at a maximum of US$2 million - or J$172 million at current exchange rates - and will be offered through the bank's 17 branches across Jamaica, said Annette Atkinson, manager of corporate communications and brand at RBC Jamaica.

RBC Royal Bank will provide financing for up to 80 per cent of the purchase price or appraised value - whichever is lower - to clients or non-clients interested in buying a new home, building a home on land they already own, accessing equity in a home they already own and occupy, or to refinance an existing mortgage on a house they already own and occupy.

Atkinson, in response to queries from the Financial Gleaner, said interest rates will be variable, but will be capped at 10.5 per cent for the first year. As with most other mortgage loans, it will be offered for a maximum of 30 years, but should not exceed the retirement age of the borrower.

Since March, the players in the private mortgage market have announced downward adjustments in interest rates on the back of the Government's reduction in stamp duty charges from 0.7 per cent to a nominal J$100, as well as the offer of low-cost funds for lenders from the state-owned Jamaica Mortgage Bank.

Jamaica National Building Society, the largest player in the local residential mortgage market with a portfolio of J$38.5 billion or 46 per cent share, announced in March that it was contemplating a downward review of its rates, which range between 14 and 18 per cent, but it has not yet done so.

Effective May 1, Scotia Jamaica Building Society, with a portfolio of J$8.6 billion, cut its lending rate for new homeowners from 14 to 10.75 per cent fixed for 36 months, but only to a select group of professionals and university students.

Victoria Mutual Building Society, the second-largest player with a portfolio of J$27.5 billion, reduced its rates effective June 1 to 10.4 per cent for savers, and 11.99 per cent for non-savers.

And in July, FirstCaribbean International Building Society, the smallest of the four players with J$8.2 billion of mortgage loans, cut rates to 10.4 per cent for account holders and 11.85 per cent for non-savers.

RBC Royal Bank will hold first rank on the mortgages it is providing, said Atkinson. Group home owners peril insurance and group mortgage insurance will be available through West Indies Alliance and Guardian Life Limited, respectively.

Both insurance outfits are connected to the RBC Financial Group, which holds a 20 per cent interest in Guardian Insurance Limited, which itself controls a number of other companies, including Guardian Life of the Caribbean in Trinidad & Tobago, and Guardian Life in Jamaica.

Atkinson also confirmed that RBC was in negotiations with National Housing Trust with a view to attracting contributors seeking to access part of their financing through the state-run agency.

The retail banking arm of RBTT Financial Group was acquired by Royal Bank of Canada in 2008. At its rebranding to RBC Royal Bank in Kingston recently, both Suresh Sookoo, chief executive for the Caribbean operation, and Minna Israel, president and country head for RBC Royal Bank Jamaica, emphasised that the institution was positioning itself to become the top bank within the Caribbean.

The RBC Financial Group Caribbean reported net income of TT$422 million for a 19-month period ending October 2010, demonstrating what is said was continued profitability and growth.

The group changed its statutory yearend from March 31 to October 31 in alignment with the statutory yearend of ultimate parent Royal Bank of Canada (RBC), giving rise to the one-time 19 month reporting period.


Source:
mcpherse.thompson@gleanerjm.com
Jamaica Gleaner
Friday July 22, 2011

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