Bahamian Contractors’ Association (BCA) President Leonard Sands said the banking sector’s lending practices are “doing more harm than good” to The Bahamas and addressed the “significant” impact those practices appear to have on the construction sector.
Speaking with Guardian Business yesterday, Sands said lending conditions have tightened in recent years, and it is “really hard” to get a mortgage for non-high-end residential construction start-ups.
“It is constricting the amount of development and activity in our economy, because banks now require so great a commitment from the client and so great a financial contribution to get a mortgage,” said Sands.
“Fewer persons are getting mortgages, and fewer new starts for construction are happening, all because of the tightening down in the construction market.
“That is not translating into good things for contractors. We don’t control that.
“We sit down at the table, and hundreds of contractors are like, ‘Where is the work out there?’
“Residential construction is shrinking and shrinking because banks are not lending the way they used to.
“They are not making it easy for clients to come in and get a mortgage, for us to start construction.”
The average cost of financing for commercial mortgages rose to 10.8 percent by the end of the first quarter in 2017, The Central Bank of The Bahamas (CBOB) revealed in its Quarterly Economic Review for March.
Total mortgage commitments for new buildings and repairs declined in number by almost half to 77. In terms of value, mortgage commitments fell by 11.6 percent, representing $11.4 million.
In addition, the report points out that construction activity in the private sector remained “subdued” for the period in review.
Sands called for a discussion among representatives of the financial services sector and the Clearing Banks Association in an effort to address this issue.
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