NASSAU, BAHAMAS — In an effort to bolster lending conditions, six of the seven lending institutions reduced loan rates during the last six months of 2021, according to a Central Bank survey.
In its recently released statement, the bank said its Bank Lending Conditions Survey (BLCS) revealed that the overall approval or success rate for loan applications has improved to nearly 80 percent.
It continued: “As COVID-19 restrictions waned, improvement in lending conditions and the demand for credit gained traction over the latter half of 2021, in line with the gradual resumption in economic activity.”
The regulator’s quarterly survey revealed that total applications for credit increased by 4.2 percent relative to June 2021.
“In particular, consumer credit applications firmed by 4.6 percent, while interest in commercial credit and mortgages both rose by 1.6 percent,” the report read.
“On an annual basis, a similar firming trend was revealed broadly across mortgages (66.9 percent), commercial purposes (23.5 percent), and consumer loans (22.9 percent).
“Further, the overall approval or success rate for applications improved to 78.2 percent—respectively increased by 3.3 and by 10.8 percentage points over the half-year and on an annual basis, the bank added.
It further noted that the outcome was due largely to higher success rates for the consumer credit applications segment.
It read: “Although lenders were more accommodative during the review period, they still cited high debt service ratio (or DSR), insufficient time on the job, and underemployed as the most common reasons for rejections.”
In terms of applications received, lenders received 14,325 applications, up 4.2 percent from six months to June 2021 and up 25.7 percent from six months to December 2020. There were 11,197 applications approved, up 8.8 percent from June 2021 and up 45.9 percent from December 2020. There were 1,494 applications denied, which was down 26.2 percent from the first half of 2021 and down 50.2 percent from the second half of 2020.
According to the survey, consumer loans represented 87.4 percent of total loan requests, with the number of applications increased by 4.6 percent over the prior six months, and by 22.9 percent relative to December 2020.
The survey also found that over the latter half of 2021, the number of mortgage applications grew by 1.6 percent to 1,178. The total volume of residential mortgage applications also rose by 2.8 percent, relative to the previous six-month period, and by 65.5 percent year-on-year.
“Approximately six of the seven lending institutions reduced loan rates during the last six months of 2021, in an effort to bolster lending conditions. Rates for mortgages and consumer loans were lowered by the majority of lenders in both the third and fourth quarters. Further, only one creditor reduced down payments, while two lenders extended payment terms. With regard to loan payment deferral, no lender permitted this option,” the survey added.
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