In T&T: Home mortgage rates going down

3 September 2012


As good a time as any to borrow? Lower reference rates say ‘Yes.’

Residential mortgage rates are continuing to trend downward, the Central Bank has said.

The Central Bank last year established mortgage rate guidelines to help real estate customers in Trinidad and Tobago.

The Bank, in consultation with the Bankers’ Association of Trinidad and Tobago (BATT), created a Residential Real Estate Mortgage Market Guideline. It went into effect on September 14 last year.

The rules are applicable, in the first instance, to all commercial banks and their affiliated non-bank financial institutions which grant residential mortgages.

The guideline also establishes an interest rate benchmark, the mortgage market reference rate (MMRR), against which all mortgage rates are to be priced and re-priced, the Bank said in a release Thursday.

The MMRR is computed by the Central Bank using information on commercial banks’ funding costs and yields on applicable Treasury bonds and is announced on a quarterly basis (the first business day in the months of March, June, September and December.

“The latest available data from the mortgage operations of commercial banks indicate that residential mortgage rates continued to trend downwards in June 2012,” the Bank said.

“Against this background, the public is asked to note that the MMRR for September 2012, which is based on data for the quarter ending June 2012, fell to 3.00 per cent from 3.25 per cent in the previous quarter.

“Commercial banks and their affiliated non-bank financial institutions are expected to apply this rate to all existing residential mortgage loans that are due to be re-priced, as well as new mortgages, from September 3.”

Customers must also be aware that the MMRR is not the mortgage rate that will be charged by the banks, the Bank said.

The mortgage rate will be computed as the MMRR and the margin that will be negotiated between the bank and customer.

The margin takes into account the customer’s credit rating, property location, the size of the downpayment and the size and quality of collateral.

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