Persons looking to build their new homes may no longer be able to access full loans at Scotia Bank to get the construction underway as the bank moves to re-evaluate its home building loan product.
In a statement to News Source following an information request, the bank said it has recently reviewed its mortgage product portfolio with a view to providing our customers with competitive options.
“Our recently launched Variable Flex Mortgage for example, provides our customers with the best mortgage rate, locked in for one year, with an option to renew at a fixed rate after the first anniversary or maintain the variable rate, if a drop in rates is anticipated. Similarly, new products will be introduced over the next few months that provide innovative benefits to our customers. As part of this process the Home Builder Loan product is currently being re-evaluated and will not be available to customers after February 1.”
The bank added that product portfolio reviews are consistent with its focus on ensuring that the products and services being offered are meeting the needs of its target market, and allowing the Bank to efficiently meet those needs.
News Source understands that the move by the bank to re-evaluate the home building loan product may be as a result of an increase in non-performing loans under the product.
The bank, according to sources familiar with the product, has seen an increase over the years in persons defaulting on their homebuilding loans. In some cases, there are reports, that persons would access the loans for home construction and would then “vanish”, leaving nothing but the plot of land behind.
News Source has learnt that the bank as part of its flex mortgage programme, will be pushing loans for the purchase of houses that would have already been built and that would have more value than just the land.
Other commercial banks have also seen a growth in defaulting loans. Citizens Bank which reported smaller profits this year, when compared to last year, believes that non-performing loans is the main contributor to the bank seeing a decrease of over $400 million in profits for 2016.
Many in the banking sector believe the slowdown in the economy over the past two years, may have resulted in the increase in defaulting loans.