During the COVID-19 pandemic, there was a slowdown in homeowners applying for mortgages.
However, in 2023 there was an uptick in applications, and the projections for this year are also expected to be favourable, according to the newly-formed T&T Mortgage Bank (TTMB).
Statistics provided to the Sunday Business Guardian from the TTMB revealed in 2023 there were 1,500 successful applications which represented a mixture of new people seeking homes, as well as those taking out loans against their properties for several reasons ranging from covering home improvement to educational and medical expenses.
Last Wednesday the TTMB and Home Mortgage Bank (HMB) merged after it was finalised on January 17, 2024.
The merger was first suggested 12 years ago and was agreed to by the companies’ respective boards three years ago.
The chief executive officer of TTMB Robert Green explained that the 1,500 mortgages completed for homeowners may seem like a small number however, he attested this was a significant accomplishment for those purchasing homes.
Green noted that before the pandemic, there were 2,200 successful applications, and he is optimistic the numbers would increase this year, saying this will allow citizens to find viable investments, mortgage solutions and financing for commercial and residential developments.
“Once the market operates as it is meant to operate with the provision of homes, the satisfaction of the undersupply of housing the application for mortgages would increase,” he outlined.
During the launch it was noted that the total assets of the merged entity amounted to $8.5 billion loans and advances totalled $6.6 billion while investment securities were $918 million.
Green, in explaining how the two entities have been profitable, said it was a fairly simple business model, as in lending the cost of funds must be lower than the amount which is lent.
“Once you manage your operational costs you will be profitable. We have a very large mortgage portfolio with a very low arrears figure, compared to the market, so therefore we have consistent streams of income coming in, without significant impact on the loan loss provision. Plus, prudence is combined,” he highlighted.
As it pertains to capital, the CEO said every year for the past seven years, the TTMB borrowed more than $1 billion to transact business.
“That’s no small achievement for a state-related organisation and secondly, an organisation with the mandate that we have. So, we serve two sets of customers, both middle and low. Also, we get housing units from the Housing Development Corporation (HDC) and the TTMB also serves the open market as well, which are properties over $1.5 million, therefore, we satisfy that market as well,” Green detailed.
One of the undertakings of the TTMB, he said, will entail reducing its cost of funds to unlend to homeowners at a more affordable rate.
Unlend refers to paying off a loan in full ahead of term or any activity associated with paying off a loan to drastically minimise interest cost.
With the price of cement and steel increasing in recent times the executive noted that the HDC and the private developers have a challenge to manage cost, but stated there are market segments at the same time to satisfy.
“The HDC satisfies the middle and lower income and the private developers supply to the middle and higher income. They have to manage their prices to be able to satisfy those markets. Once those markets are satisfied and the values are consistent. The TTMB will always provide funding for those units,” Green said.
Asked about job security following the merger, he assured that the 230 employees have been retained, maintaining there no job cuts took place during the transition.
Regarding future plans for the TTMB, Green said the entity is looking to operate in regional markets.
At the unveiling of the new logo which also took place during the launch, the TTMB’s chairman Patrick Ferreira also shared some figures relating to the home finance industry.
“Our secondary mortgage market operations continued with the sale of mortgages, TTMF to HMB, for $888 million. In executing our mandate to support the development of a system of real property and housing finance and provide leadership in the housing and home finance industry, during the same period, we funded commercial and residential projects for $0.86 billion,” he said.
Further, he said the two entities have partnered with the IDB to raise $800 million in funding.
Ferreira said HMB partnered with IDB Invest to issue the first social bond in T&T and the Caribbean region for $300 million.
The TTMB, he added, intends to pursue further opportunities to partner with regional and international agencies in pursuit of its funding requirements.
“There have been successes concerning our mandates and equally commendable was the joint profitability over the last five years. We have generated for our shareholders $1.06 billion in profit before tax and $387 million was paid by way of dividends.
“Total assets of the merged entity amount to $8.5 billion. Loans and advances total $6.6 billion while investment securities total $918 million,” the chairman added.
Shedding light on the funding process, he said HDC’s funding requirements were supported by the mortgages granted on the sale of its properties. He said over the last five years 2,546 homes were funded for $1.3 billion.
Ferreira noted that receivables funding was advanced totalling $469.9 million.
In terms of the merger, the chairman indicated the TTMB and the HMB have entered the third phase of the implementation of the merger in which HMB will be dissolved and its assets and liabilities transferred to TTMB.
He identified that the dissolution would necessitate the repeal of the Home Mortgage Bank Act, but TTMB will be well served with the retention of some of the benefits currently being enjoyed under the HMB Act.
“We will be making representation through the Ministry of Finance to retain these benefits, in particular, the tax-free bonds which the HMB issued. Proposals have been advanced to enhance the affordable financing programme that will expand the ‘net’ of families that can obtain financing under this programme,” Ferreira detailed.
On August 6, 2021, a decision was taken by the board of directors of TTMB, the HMB and its shareholders, the National Insurance Board of T&T (NIBTT), and the Minister of Finance Corporation Sole to effect a merger of the operations of TTMF with those of the HMB.
Finance Minister Colm Imbert during the 2022 budget presentation had said that the TTMB is expected to be a more streamlined organisation with improved financial strength to enhance public trust and confidence.
This new entity, he noted, is meant to be better equipped to service the delivery of affordable houses by HDC.
“Greater mortgage loan ability will lead to a larger financing turnover in the mortgage sector and a gradual reduction in the demand for houses,” Imbert said.
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The TTMF was incorporated in 1965 “to provide mortgage finance to the purchase of dwelling houses (including land) such mortgages to qualify as guaranteed under the Housing Act 1962.”
It carried the reputation of the largest provider of mortgages in the local market, excelling at both individual and multi-family housing developments.
The HMB was created in 1985 as a “specialised financial institution which offered financing and investment opportunities.”
In its dual role, it provided financing to facilitate property development projects and commercial mortgages while it engaged in capital markets, presenting a range of investment products geared towards both individuals and institutional investors.