NASSAU, BAHAMAS- Lending conditions improved in the second half of 2024, with total loan applications rising by 22.7 percent and approvals up 20.0 percent, driven by strong consumer demand—including a more than five-fold increase in taxi and rental car financing—as well as growth in credit card, land purchase, travel, and private vehicle loans.
The Central Bank’s Lending Conditions Survey for December 2024 revealed continued expansion in the lending sector, particularly in consumer credit. Consumer loans accounted for an overwhelming 94 percent of all loan applications during this period. Notable spikes were seen in financing requests for various consumer needs, such as credit cards, which rose by 51 percent, and debt consolidation, which saw an increase of 21.1 percent. In addition, travel financing increased by 5.6 percent, while private vehicle loan applications grew by 22.1 percent. A significant rise in requests for taxi and rental car financing was particularly noteworthy, with these categories showing an increase of more than five-fold compared to previous periods. The surge in these sectors highlights shifting consumer priorities and the growing demand for specific types of financing that cater to transportation and leisure activities.
On the mortgage front, residential mortgage applications saw a 6.8 percent year-on-year decrease, though this was an improvement over the 14.6 percent contraction observed in December 2023. The approval rate for mortgages increased to 54.6 percent, a rise of 1.8 percentage points from the previous year, indicating more favorable conditions for homebuyers. Demand for financing remained high for existing residential properties, which accounted for 59 percent of mortgage applications, while requests for new construction and renovations showed declines of 13.9 percent and 54.2 percent, respectively. Interestingly, mortgage demand in the Family Islands grew by 16.1 percent, while applications in New Providence decreased by 9.4 percent.
Commercial loans experienced a decline in demand, falling by nine percent, largely attributed to lower business activity in New Providence. However, the approval rate for commercial loans remained strong at 88.6 percent, with most denials due to high debt service ratios, delinquency on prior loans, or insufficient business profitability. While the demand for commercial credit slowed, the overall credit environment continued to be supportive for businesses, especially in the areas where local banks have made recent enhancements to lending terms.
The survey also highlighted that most banks continued to reduce their lending rates during the second half of 2024, contributing to more favorable conditions for both consumers and businesses. Additionally, several institutions offered more flexible repayment terms and lower down payments to borrowers, further enhancing lending access.
