Central Bank: Increase in loan approvals
Most consumer loans denied by commercial banks this year were denied because of high debt service ratios held by those who attempted to secure the debt, the Central Bank of The Bahamas’ (CBOB) most recent lending conditions survey revealed.
While the CBOB survey conducted on the state of commercial banks’ lending revealed that many of the loan applicants already had too much debt to secure another loan, it also revealed that loan approvals were higher as compared to 2018.
The survey explained that “demand for commercial credit also firmed vis-à-vis the first half of 2018” with an approval rating of 86 percent.
During the survey period, from January 2019 to June 2019, 19,712 loans were processed, which was up 17 percent compared to the same period last year, the CBOB noted. The majority of the loan applications, 91 percent, were for consumer loans.
According to the survey, the most popular reason for loan denials was that debt service ratios were above the allowable threshold, which represented 30 percent of loan seekers. The next most popular reason was that loan seekers were without collateral to secure the loan.
Other reasons were that those seeking loans were delinquent in their prior loan payments, could not provide a down payment, had insufficient time on their job, were underemployed, or were unable to verify their income.
Most mortgage loans were denied because loan seekers had debt service ratios that were too high, the survey revealed.
It added that most mortgage applications were for existing dwellings; new construction was secondary to that, while renovations and additions to homes was third.
According to the survey results, 53 percent of mortgage applications were approved.
The survey also revealed that the majority of loan seekers sought debt consolidation services, the second largest represented credit card debt and the third largest was loans for travel.
People also sought loans for private cars, furnishings and appliances, taxis and rental cars, commercial vehicles, education, medical expenses, home improvements and land purchases.
Education: Florida International University, BS in Journalism
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