Neil Hartnell

Tribune Business Editor

nhartnell@tribunemedia.net

New mortgage applications during the 2025 first half fell to levels last seen at the COVID-19 pandemic’s peak, it was revealed yesterday, with a senior banker warning the market will “remain subdued” unless hundreds of distressed properties are dealt with.

Gowon Bowe, Fidelity Bank (Bahamas) chief executive, told Tribune Business that potential mortgage borrowers are failing to connect the number of delinquent, non-performing home loans clogging bank balance sheets with “depressed activity” in the mortgage market and a reluctance to lend other than to the most credit-worthy and qualified borrowers.

He disclosed that he knows of “prime borrowers” who have contacted him personally, believing that they were “shoe in” to qualify for a mortgage loan only to fail to obtain financing, with the Central Bank yesterday revealing that new home credit applications declined 12.4 percent year-over-year to 695 during the 2025 first half.

That, according to charts published by the banking regulator, represents the lowest half-year number of residential mortgage applications received by the Bahamian commercial banking regulator for five years since the COVID-19 pandemic was at its height.

“Mortgages is one of those sectors that is going to remain subdued until we have the excess inventory resolved one way or another,” Mr Bowe told this newspaper of the continued overhang caused by distressed properties. “People are continuing to apply, and the real question is are increased numbers qualifying?

“The answer is no. We are not seeing any movement in distressed properties, and that will be the greatest value proposition because those are the ones that banks are prepared to let go. Applications are not the greatest indicator. I know of prime borrowers who have called me, thought they would be a shoe-in for a mortgage, and it did not come to pass.”

Mr Bowe said many Bahamians were equating talk of an improving economy to an increase in commercial banks’ willingness to lend, “but are not connecting that to distressed properties that continue to depress activity”.

The Central Bank, unveiling its lending conditions survey for the 2025 first half, said the mortgage loan approval rate - meaning how many applications were approved during the period - stood at almost 54 percent and represented a 0.3 percentage point drop year-over-year.

“In the first half of 2025, respondent banks received 695 residential mortgage applications, accounting for 99.4 percent of the total mortgage applications received,” the Central Bank report said. “However, the volume of residential mortgage applications declined by 12.4 percent year-on-year, albeit lower than the 25.5 percent decrease in the previous year.

“Reductions were documented for two of the major categories: Rehabilitations and additions (94.9 percent) and new construction (2.1 percent), while funding requests against existing dwellings increased by (60.5 percent).

“Of the total mortgage applications received, financing sought against existing residential dwellings represented 76.7 percent of mortgage demand, while demand for new construction and rehabilitations and additions loans accounted for 20.5 percent and 2.3 percent, respectively. Meanwhile, commercial financing applications constituted just 0.6 percent of requests,” the banking regulator added.

“Categorised by island, mortgage applications processed from Grand Bahama fell by 22.1 percent, while requests originating from New Providence and the Family Islands reduced by 12.3 percent and 16.7 percent, respectively.”

But, when it came to approving new mortgage loan applications, the Central Bank said: “In the first half of 2025, total mortgage applications recorded an approval rate of 53.9 percent, reflective of a 0.3 percentage point decrease, relative to the comparative 2024 period.

“In the sub-categories, the approval rate for renovation projects was 56.3 percent, while support for new construction and existing dwellings were 69.9 percent and 49.4 percent, respectively. In addition, commercial mortgages registered an approval rate of 75 percent.

“Of the total requests, 7.6 percent of mortgage applications were denied. The primary reason for mortgage denials, representing 45.3 percent of cases, was categorised as other ‘miscellaneous’ factors” such as low creit scores.

“Further, applications were also denied on account of higher debt service ratios, which exceeded the revised threshold of 50 percent (24.5 percent), delinquency in prior loans (9.4 percent), inability to verify income (9.4 percent), inadequate collateral (5.7 percent), no down payment (3.8 percent) and underemployment (1.9 percent),” the Central Bank said.

Consumer lending, meanwhile, accounted for 94.4 percent of total loan applications. “Requests strengthened by 14.8 percent year-on-year for the six-months to June 2025 over the same period in 2024),” the Central Bank addd, “owing to a rise in applications received from New Providence (12.3 percent), Grand Bahama (28.8 percent) and the Family Islands (25.4 percent).

“Of the 18,018 consumer loan applications received, requests were mainly for ‘other’ miscellaneous purposes (33.1 percent), credit cards (22.6 percent), consolidation of debt (17.2 percent), private cars (10 percent) and travel (9.5 percent).”

The banking regulator added: “Year-on-year, the quantity of approved loan applications grew further by 17.1 percent as compared to 14.5% percent for the prior period, while the average approval rate moved higher by 1.6 percentage points to 83 percent.

“Lending requests, by component, showed increases for commercial vehicles by 90 percent and other miscellaneous purposes by 45.6 percent. Similarly, demand rose for private cars (30.9 percent), land purchases (26.9 percent), medical treatment (23.8 percent), credit cards (19.8 percent), home improvements (11.7 percent) and furnishings/appliances (0.8 percent), while taxis and rented cars increased five-fold. Conversely, applications declined for consolidation of debt (17.5 percent), education (8.1 percent) and travel (6.8 percent).”

As for rejections, the Central Bank said: “Concerning loan denials, 7.8 percent of consumer credit requests were rejected based on frequently cited reasons such as other ‘miscellaneous’ factors (49.9 percent), which include low credit scores, purposes outside of banks’ policies and excessive risk; high debt service ratios (27.2 percent); delinquency in prior loans (8.8 percent); and insufficient time on job (7.4 percent).”

Turning to the mood among its commercial bank licensees, the regulator added: “On average, most of the respondent institutions reduced lending rates during the second quarter of the review year. Further, two institutions disclosed lowered down payment requirements and extended repayment terms. Moreover, no new deferral arrangements was disclosed for monthly payments.

“When asked to describe the general lending environment, creditors noted that in comparison to the prior year’s period conditions were largely unchanged in 2024. Likewise, borrowers’ loan eligibility, quality of collateral and borrowers debt servicing capacity remained the same. The majority of creditors expected that near-term credit conditions would remain largely unchanged.”