The mortgage market in Trinidad and Tobago has expanded significantly in value terms but remains remarkably underdeveloped compared with the main industrialized countries or even many emerging market countries. In the United States of America, the United Kingdom and in other developed countries, the mortgage market is typically comprised of a whole range of institutions that are largely dependent on long-term funding sources (mortgage securities). Also, with intense competition for mortgage business, institutions are in constant search for innovative ways to meet evolving market needs.
In Trinidad and Tobago, with the sharp increase in personal incomes, housing demand has surged over the last decade. This, combined with a significant expansion in government housing programs, has led to a rapid increase in construction costs and property values. Correspondingly, mortgage loans outstanding on the books of private and public institutions have more than doubled over the decade. Somewhat surprisingly, however, private mortgage- lending institutions have been reluctant to tap the market for long- term savings through bond issuance. Moreover, among the traditional mortgage institutions, there has been limited product innovation to expand the range of options available to consumers.