Fewer mortgage commitments in Q1, notes Central Bank
The financial uncertainty attached to the COVID-19 pandemic has spilled over into homeownership, with the Central Bank of The Bahamas (CBOB) reporting a 16.3 percent decrease in mortgage disbursements for new construction and repairs during the first quarter of 2020.
During the first quarter of 2019, there was growth of more than 28 percent in total mortgage disbursements. However, where there was a reduction in the residential component in the first quarter of 2020, new builds and repairs in the commercial component saw marginal growth.
“The dominant residential component contracted by 16.7 percent to $26 million. In contrast, commercial disbursements rose by 5.9 percent to $0.6 million. Compared to the same period in 2019, total mortgage commitments for new buildings and repairs — a forward-looking indicator of domestic activity – grew in number by 46 to 129, while the corresponding value increased more than threefold ($7.8 million) to $23.4 million,” the Central Bank’s most recent quarterly economic report points out.
“Disaggregated by loan category, the number of undisbursed approvals for the residential component rose by 43 to 125, with the associated value more than doubled to $21.7 million. In addition, four commercial commitments were approved, valued at $1.6 million, compared to one, valued at an estimated $0.04 million in the previous year.”
The average interest rates for commercial and residential mortgages dropped marginally as well, by 1.8 percentage points to 5.25 percent for commercial mortgages and by 10 basis points to 6.79 percent for residential mortgages.
The Central Bank also noted a decline in the total value of outstanding mortgages during the first quarter of 2020, which decreased slightly by $17.1 million – or 0.6 percent – to $3,001.1 million.
This was an extension of the falloff trend at the end of 2019, which shrank $11 million or 0.4 percent.
“Contributing to this outturn, the residential component — which comprised 94.2 percent of the total — reduced further by $11.4 million (0.4 percent), from $1.7 million (0.1 percent) in the prior period, for an ending balance of $2,827.0 million,” the bank stated.
“In addition, commercial balances declined by $5.7 million (3.2 percent) to $174.1 million; albeit lower than the $9.3 million (5.1 percent) reduction a year earlier.
“At the end of March, domestic banks held the majority of outstanding mortgages (87.9 percent), followed by insurance companies (6.5 percent) and the Bahamas Mortgage Corporation (5.6 percent).”
- American Airlines resumes flights toThe Bahamas - July 8, 2020
- Slow return of passengers helping with capacity mitigation at LPIA - July 8, 2020
- Turnquest: U.S. fiscal transparency report misleading and unfortunate - July 7, 2020