Commercial bank halts lending for home construction
Aug 16, 2017 , http://www.kaieteurnewsonline....r-home-construction/
As Government moves to jumpstart the once-booming housing sector, there are indications that at least one commercial bank may be saying no to applicants for construction.
While the banking sector has been quiet about the housing sector, there has been within the last three years a noted slowdown in construction as lands have essentially run out and quite a number of private developers who borrowed heavily, have been running into early trouble.
Hardware retailers are complaining of reduction in business with persons involved in the spin-off services, like transportation, also expressing unhappiness.
On Monday, there were indications from senior government officials that local banks are looking at other ways to raise revenues.
The disclosures were made Monday when Minister of Finance Winston Jordan, Central Bank Governor, Dr. Gobind Ganga and other officials hosted a press conference to discuss the country’s half year’s performance.
It was not immediately made clear which commercial bank has eased up lending for construction. However, according to Minister Jordan, there are indications that finances have not been closed off for applicants who want to buy a property as against building a new one.
Home owners have been struggling to complete new homes, with officials saying that more than 50 percent of the lands allocated in the last six years or so have remained unoccupied.
Still, the absence of enforcement coupled with informal arrangements between house lot owners and contractors have been compounding the problems. Many homes are unfinished because of bad spending and conflicts with contractors, it has been reported.
Quite a number of persons have lost their jobs or are unable to keep up with the monthly mortgages.
Local banks and the New Building Society have not come out openly saying that mortgage lending is in trouble. However, recent financial reports have pointed to an increase in non-performing loans and mortgages.
Once a big spinner of the economy, financing for housing is now being handled carefully by banks, which are fearful of unmanageable losses if the situation gets out of control.
Mortgage interests have been contributing significant revenues for the financial institutions.
According to the Central Bank Governor, banks operating are only allowed to a certain percent of non-performing loans and mortgages.
In any case, says Minister Jordan, it could be a case that banks are looking at other alternatives to make money. He pointed out that the situation could open up opportunities for other competing financial institutions offering the same services.