More loans issued for new home construction
There has been a marked uptick in the number of mortgages being applied for and approved for the construction of new residential homes during the second quarter of the year, a turnaround from the contraction experienced during the previous three months.
This has occurred while the average financing cost for a residential loan softened by 30 basis points to 7.2 percent, according to The Central Bank of The Bahamas (CBOB).
In its Quarterly Economic Review (QER), which covers the months of April through June, the CBOB noted that data for the second quarter showed that the total mortgage disbursements for new construction and repairs – as reported by domestic banks, insurance companies and the Bahamas Mortgage Corporation — rose by 20.9 percent to settle at a value of $31.3 million.
That’s a reversal from a 23.3 percent contraction in the sector during 2017.
“Underlying this development, the dominant residential segment firmed by 29.3 percent ($6.5 million) to $28.8 million, vis-à-vis a 27.1 percent contraction in the prior period,” the QER notes.
This is in contrast to commercial mortgage disbursements for new construction, which declined by 30.8 percent ($1.1 million) to $2.5 million, compared to a 13.7 percent advance in the prior year, according to the CBOB.
“Data for mortgage commitments suggests that domestic activity will remain subdued over the near term, as loan approvals for the dominant residential component fell in number by 38 to 95, and in value by 40.1 percent ($5.8 million) to $8.6 million,” the QER states.
“No new commercial approvals were granted during the second quarter, compared to just one a year earlier, valued at $1.6 million.”
The average rate charged for a commercial mortgage firmed by 30 basis points to 7.8 percent.