Mortgages on the rise

AT least one bank is reporting an excellent uptake of its mortgage options last year, attracting $7 million over its $35 million target.

 

Republic Bank (Barbados) Limited’s Managing Director and Chief Executive Officer, Ian De Souza, told the media yesterday afternoon, that while interest rates on savings have been lowered, so too have the rates on mortgage lending, which he alluded has been attracting customers. He said that the bank started a campaign in June last year where it introduced a rate of 4.5 per cent on mortgages, and their goal was to acquire $35 million in new mortgage business, but in fact they issued 117 mortgages valued at $42 million.

 

“It was a pleasant surprise, but I give a lot of credit for that to our branches, the sales team that we have, the managers and the sales officers in the branch network… They did not sit in the branches and wait for people to respond to the advertisement, they went out and they hunted mortgages and they got the business. So I am absolutely proud of the work that was done by the branch network,” he said.

 

This mortgage business, he explained, is expected to have a positive impact on the Barbados economy, as a lot of the business was for new homes that are to be constructed. The bank executive explained that it will result in an increase in construction activity, which will translate to an increase in employment.

 

“That is how you get the economy being stimulated. We are hoping that the trend continues; we would like to see continued demand for mortgages in the market. A mortgage for the bank becomes a very important part of the business because a mortgage sits on your books for 20 years on average, and you get the annuity income coming, so we love to do mortgage business,” he said.

 

De Souza added, “Once you have a customer on your book with a mortgage you are able to finance their car; you are able to finance their vacations, if they want to go on nice expensive vacations; you are able to finance education for their children, either locally or overseas.”

 

Meanwhile, speaking to the wider mortgage portfolio, De Souza said while a few years ago Republic Bank, like others in the market, experienced some delinquency from customers in respect of their payments, he said they have “tried very hard” to work with customers in an effort to keep them in their homes. As such, he said they established where needed, flexible repayment arrangements for customers.

 

“Only in circumstances where there is complete loss of income, or the income level is at a point where a customer really can’t at all service the mortgage, we have to go the route we don’t like, which is having to realise on the security. We try as hard to avoid that as possible,” he stated. (JRT)