Growth & Jobs | Now’s a good time to get a mortgage

Real estate experts believe now is a good time to get a mortgage in Jamaica, despite the market being impacted by various factors, including high interest rates, logistics and supply chain issues.

Gabrielle Grant Gilpin-Hudson, first vice president of the Realtors Association of Jamaica (RAJ) offers that now is an opportune time for people to seek out good deals, as Jamaica’s current real estate climate is a mix of the two main market cycles; a buyers’ market and a sellers’ market. In a buyers’ market, the demand for property exceeds sellers, while in a sellers’ market there is more demand than supply.

Gilpin-Hudson says in some segments of the market, such as the under $40 million segment, there are more buyers than sellers. This means sellers in that segment still have the upper hand. However, she pointed out that for properties above the $40 million range, there are more sellers than buyers, which gives those buyers more power to get deals and negotiate prices with sellers.

“Now is a great time to shop around. We’re in a hybrid market which means that you could be strategic by pursuing a property that has been on the market for a longer time and is taking long to sell. You could make an offer and try to get a deal on the property,” she advised.

Gilpin-Hudson says further that persons should not be afraid of the current higher interest rates, as there is always the option to refinance their mortgage loans at a later time. She advises that although there is some uncertainty about interest rates locally, even if the Bank of Jamaica (BOJ) policy rates decline in 2024, the reduction may not be immediately felt within the mortgage sector. Gilpin-Hudson says that “even if mortgage rates do not come down in 2024, housing prices could potentially continue to go up, as they historically have, and so the best time to buy is always today.”

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“The US Federal Reserve has indicated that they will not be raising interest rates further and hopefully this means they will soon begin to cut rates and if that happens, the rate cut should cause their housing and mortgage market to pick up again. Similarly, the BOJ has been holding policy rates firm, if they continue to hold firm, and even eventually reduce rates, our markets should also pick back up. At present it is uncertain whether that will happen in 2024,” Gilpin-Hudson remarked.

“So if you find a property deal now that you can afford, grab it and then later on, if the interest rate comes down, you can ask your mortgage provider to reduce your rate in accordance with the market and if they don’t want to, you can always go to another mortgage provider to get the details on whether or not you could refinance the mortgage and move it to another provider on better terms,” she added.

GOOD INVESTMENT

She says that in general, anyone looking to get a mortgage now should ensure that they know what they can afford or qualify for, or what they may need to do to put themselves in a position to better afford or qualify for the price point they want. This may mean downsizing debt and postponing other purchases.

“You should know your options of the rates and terms available from different mortgage providers, but you should also look beyond the numbers, and choose a mortgage provider that offers good customer service and insightful financial advice,” she said.

Petal James, group sales executive at The Jamaica National Group, underscored that despite the challenges in the market, getting a mortgage now is a good investment.

“Even though in some of the higher income ranges the housing prices are making the mortgage volumes a little stagnant, it is still good to buy. At the end of the day you are sure of the property’s appreciation because of the market conditions in Jamaica. So it is always good to purchase and the best time to purchase is now, because the price today won’t be the same tomorrow,” she said.

James added that persons considering getting a mortgage should ensure they plan ahead. She recommends shopping around for the best terms and conditions.

“Go with an institution that gives you everything upfront. Some institutions are not very open with you about all the costs (closing costs, stamp duties, etc.) and they will hit you in the backend,” she noted.

She said saving should also be a priority for people looking to take out a mortgage, noting that “The more you save is the more equity you will have in that property. And so borrowing will be less because you don’t have to borrow the full amount and what that does is (it) reduces your monthly payments.”