By YOURI KEMP
Tribune Business Reporter
Bahamians must stop prioritising luxury goods, a top banker urged yesterday, with home ownership set to take a “tremendous blow” in the next year due to COVID-19.
Gowon Bowe, Fidelity Bank (Bahamas) chief financial officer, told a webinar organised by the Chartered Financial Analyst (CFA) Society of The Bahamas: “Home ownership is going to take a tremendous blow, certainly over the next six to 12 months, and potentially longer for two years.
“We have had a significant inventory of distressed properties. I have put forward to the governments - the previous government and current government - that they need to look at an opportunity to create REITs (real estate investment trusts).
“They need to also look at opportunities to say how do we get some of the distressed properties moved by virtue of saying, as opposed to continuing to grant crown land to individuals that may never be able to afford the financing to build on it, can you use the same level of funding to purchase distressed properties at cents on the dollar?,” he added.
“Then turn around and invest in the construction industry by renovating those properties and making them more readily available through the Mortgage Corporation, which has a programme.”
Mr Bowe said too many Bahamians were taking themselves out of being able to afford a home by prioritising high-end luxury goods, such as cars and jewellery, and over-burdening themselves with consumer loans taken out to finance these purchases.
“So there is a sweet spot in terms of the dollar value of the homes,” he explained. “I think about how do we make Bahamians owners in the industry, and I think it is about putting the onus and responsibility on individuals.”
“The first thing we wanted, our parents, they saved towards a home. Now the first thing is we want a new car, we want to have the jewellery, and we want to have the lifestyle image without the foundation of a home.
“The only way that changes is by appreciating that it wasn’t by chance our forefathers had homes. It was for the fact they sacrificed, and they saw the need to plant roots and create a foundation and a home for the family to have in perpetuity, and we have to try and remember some of those old school values.”
Warning borrowers against having no intention of repaying the loan, Mr Bowe said: “Put it this way. A bank is only a broker between shareholders, depositors and borrowers. The bank’s management are fiduciary agents that say I take money from the shareholders and the depositors, and lend to borrowers.
“If anyone in that circle doesn’t honour their commitment then it falls apart, so it cannot be seen as banks being donors of money. They are lending, and the persons who take on loans have to have the responsible attitude of repaying it, because they are taking money out of someone they know who would suffer deposit loss and shareholder loss.”