Jamaica Mortgage Banks writes over $3.5 billion in new business in COVID year

Head of the Jamaica Mortgage Bank Courtney Wynter yesterday indicated that the lender will exceed, for fiscal 2020/2021, the value of projects deals underwritten in 2019/2020, which was JM$3.5 billion.

The company’s record has ballooned with heightened construction activity despite the spread of the COVID-19 virus.

Speaking at the JMB/Jamaica Developer’s Association conference held in Kingston on January 28, Wynter said, “JMB will set a record in projects written in the 2020-2021 COVID year, exceeding our projects written in 2019-2020.”

(Photo: Facebook)

Five-year performance

Between 2015 and 2020, the bank financed 58 projects at a total cost of $28 billion.

The Jamaica Mortgage Bank was established in 1971, and on June 5, 1973, the institution converted to a statutory corporation. The company’s mandate then was to finance safe and affordable housing so that all Jamaicans will have access to homeownership.

“JMB will set a record in projects written in the 2020-2021 COVID year, exceeding our projects written in 2019-2020.”

— Courtney Wynter, general manager, Jamaica Mortgage Bank

Today JMB seeks to mobilise financial resources for on-lending to private and public sector developers and financial institutions, developing an active secondary mortgage market and providing mortgage indemnity insurance.

Wynter stated that over a five-year time period, from 2015 until last year, the number of female developers surpassed males; and that the average size of housing units had fallen from, 1,334 square feet to 937 square feet. Meanwhile, the average cost of construction has moved from JM$8,400 per square foot to JM$15,200 per square foot.

He also noted that the average cost of apartments has remained flat due to the reduction in unit size. However, the average price per square foot moved from JM$18,700 to JM$26,700.

Jamaica Mortgage Bank General Manager Courtney Wynter
(Photo: Pride News Magazine)

He also pointed out that for projects funded by the JMB, the average return on investment (ROI) was 21 per cent, while the average return on equity (ROE) was over 80 per cent. “Only the stock market can compete with this level of return,” he stated.

JMB can meet the demand

According to Wynter, the JMB notes the Governments’ aim to provide 70,000 housing units in four to five years.

The price point currently set by the prime minister is in the low-income range of JM$8 million. On the other hand, the NHT maximum loan per couple is JM$13 million.

The National Housing Trust in Jamaica (File photo)

There is, however, significant demand for low- to middle-income
housing (JM$5 million to JM$8 million).

“Assuming a mix of offerings including 25 per cent serviced lots and 75 per
units, and assuming the developers need to make 21 per cent return on their investment, the all-in cost would be [JM]$5 million per unit,” Wynter exponded.

“The cost, therefore, to meet the GOJs goal is between [JM]$350 billion to [JM]$380 billion, excludingthe cost of land.”

He suggested that possible sources of financing are the NHT, private developers, other government entities, and pension funds. Other options, he said, was for the island’s biggest lenders to sell off a portion of their mortgage receivables, which now stands at over JM$400 billion, freeing up new funds for lending.

Wynter also noted that housing development is a big opportunity for diaspora partners.