The Central Bank of The Bahamas (CBTB) says it is relaxing the guidelines for domestic banks and credit unions on the minimum equity injection requirement for residential mortgages.
It said while this is not anticipated to have a significant impact on personal lending, it should reduce the cost burden for suitably qualified borrowers and allow some additional individuals to qualify for credit.
“With immediate effect, the mortgage indemnity insurance is removed from the Central Bank’s stipulation for borrowers to qualify for a reduced equity or down payment amount on residential mortgages,” the bank said.
The CBTB said that in the absence of the insurance, the minimum down payment for such mortgages was 15 per cent.
“Moreover, in line with the Central Bank’s relaxed rules for other personal lending, issued in August 2022, financial institutions may also vary or set lower down payment requirements for residential mortgages, in line with their internal frameworks for assessing and managing individual borrower risks.”
The CBTB said however, lending institutions are directed to observe that personal lending is still subject to the borrower’s total debt service ratio remaining within a prudent limit of 50 per cent.