Fewer residential mortgage commitments as consumers feel the pinch of COVID-19

Fewer and fewer Bahamians have been obtaining residential mortgages, according to the latest data provided by The Central Bank of The Bahamas’ Quarterly Statistical Digest, again reflecting the impact of the COVID-19 pandemic on consumer spending patterns.

Data in the report shows that while the year started strong, with 253 mortgage commitments during the first quarter, the numbers dropped steadily for the subsequent quarters, landing at 166 in the second quarter and 160 in the third quarter.

The bulk of commitments came for mortgages on single dwellings, which stood at 129 in the third quarter, down from 244 in the third quarter of 2019.

The total value of single dwelling mortgage commitments so far this year was just over $94 million, while it stood at $17.5 million for duplex and row dwellings.

“It is a genuine reduction in credit overall for the year. And we’ve been through several years where the private sector’s total credit position to the bank sector has been either stable or slightly declining. When we look into the near and medium term outlook, the expectation is that one would see the private sector credit beginning to show a more sustained gradual uptick,” Central Bank Governor John Rolle said regarding private sector credit performance.

“From the early part of the year to the present, we have not seen the delinquency rate yet begin to manifest what we are experiencing in the pandemic and the level of layoffs. So, the non-performing loan rate in The Bahamas is still just around 8 percent in the commercial banks in the private sector. We do expect that as we transition through 2021, more clarity is going to be brought to bear in terms of the financial situation of more borrowers. More borrowers will be beyond the period of forbearance for deferral of loan payments and on the margin we should begin to see some climb in terms of non-performing loan exposures.”

There were 25 commercial mortgage commitments made for the first three quarters of 2020, at a combined value of just above $17 million.

The Central Bank has said that monetary sector developments will continue to be marked by high levels of liquidity within the banking sector, as commercial banks maintain their cautious lending posture.

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source https://thenassauguardian.com/fewer-residential-mortgage-commitments-as-consumers-feel-the-pinch-of-covid-19/