By NATARIO McKENZIE
Tribune Business Reporter
MANY Bahamians are unable to qualify for home construction mortgages because lending institutions are “no longer in touch” with the economy, a top contractor is arguing.
Michael Pratt, the Bahamian Contractors Association (BCA) president, said in a statement that the industry “overwhelmingly” supports clients financing home construction from their own means - as recently advocated by minister of state for legal affairs, Elsworth Johnson.
Michael Pratt, the BCA president, in a statement said whether Bahamians can build their homes without bank funding was the topic of discussion at the organisation’s monthly meeting last week. He added that an “overwhelming yes” was the consensus response.
“The times have changed today,” he added. “However, one thing remains the same in that access to capital is limited through the banks. Therefore, since we the contractors depend on our clients to provide work, the question remains: Do we stand and wait for the banks?
“The banks have disappeared, by and large, from our shores so we recognise that we have to assist in adjusting the mentality of our clients. We have to shift due to our new financial and economic reality.”
Mr Pratt continued: “The millennial generation is in a totally different era, and must adjust to the reality of these times. Some of them are entrepreneurs, or under-employed, and are not attractive to banks for funding.
“Therefore, for a home they have to be creative. The reality is a vast majority of the population cannot qualify for a mortgage by the bank’s standards. This does not mean they cannot build their home.”
Mr Johnson last month suggested in the House of Assembly that Bahamians should “build out of your pockets” instead of going to a bank for a home construction loan or mortgage. However, the major obstacle to doing so is that few Bahamians have sufficient financial resources of their own to afford their own home, thereby making them reliant on debt financing.
Mr Pratt said the main advantage of obtaining a mortgage loan is that the home will be completed within a shorter time - albeit with debt that will have to be repaid, usually over a period lasting 15 to 35 years.
“Without bank financing it may take five years to complete your home, and with a lot of sacrifice. However, there will be no 30-year mortgage payments, which is normally the rest of your working life,” added Mr Pratt.
“This economy is unforgiving and we are burdened with lending institutions that are no longer in touch with the Bahamian economy, as decisions are now largely approved offshore. Many Bahamians continue to build their homes now without banks.
“It can be done with sacrifice, self-help, bartering. Fostering and developing beneficial relationships, and secure asue financing, can allow them one day to walk into their dream home. Therefore, we as contractors have to adjust our construction model to meet the needs of a large amount of our clients.”