Letters to the Editor

Finally, lenders are using their creativity

Tuesday, April 23, 2019

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Dear Editor,

There are some exciting things happening in the mortgage industry. First, the Government reduced the down payment and stamp duty significantly. Then the financial institutions got into the act. We now hear of creative new ideas — interest rate reductions, 110 per cent accommodation. As well, I think the National Housing Trust (NHT) now has generational mortgage arrangements.

All of this is confirmation that valid competition is a powerful incentive to do better. This is the kind of competition that empowers everyone. This is the kind of creative financing that is needed in the financing business.

There is an oft-repeated statement: “It is easier to get a loan to buy a car than to start a business in Jamaica.” And it may well be true. I remember a man having to use a rented car for three years because his banker refused to lend him the equivalent of three weeks' salary to repair his own car. That was 1994, and I still struggle to understand how that could have made sense to even the janitor of a bank.

I think this is only the beginning, however. I happen to know many people out there with good ideas, but they are not packaged neatly enough to impress their bank.

Many years ago I was doing some research that took me to the dump. I was shocked to discover that many people there scavenging had three-bedroom houses in the Hughenden and Maverley area. They confided in me that it took some very creative strategies to possess those houses as no bank would accommodate them.

The informal business sector in Jamaica is huge. The tendency is to look at that type of occupation and assume. But the man washing cars downtown can make more than the government employee at the entry level. And he pays no taxes.

Why can't one use 12- or 24-month bank statements as an alternative to your standard income documentation? The next challenge is to create some uncommon home loan programmes for the common people and find the right loan programme to fit the individual borrower's needs. Even if one stays within the onerous lender guidelines there are multiple viable options. If a prospective customer does not qualify for the loan programme they want, don't allow that person to leave the building.

I have found financiers place great limitations on their creativity. Homeownership has a powerfully positive impact on life satisfaction, self-esteem and overall psychological well-being. Almost half of those surveyed by psychologist Elizabeth Neal, in conjunction with ME Bank, said they felt inadequate as a result of not owning a home. That's two years ago.

Previously, one got the impression that financiers were primarily focusing on the competition. Now, at long last, it seems they have started to focus on the customer. They should be encouraged; their doors won't close for lack of interest.

Glenn Tucker

glenntucker2011@gmail.com


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