By John Denny
Observer Reporter
(Nevis) – The U.S. mortgage and real estate mess has not translated entirely to the Federation. Prudent lending practices have helped to keep the real estate market strong for local buyers. Local realtors say it has affected business, but not much.
“Absolutely, we are feeling it,” said John Yearwood of Coldwell Banker. “Probably not as severely as it is in the states. Our business from overseas has slowed down some, but the local market is still fairly strong.”
The reason the economic disaster in the states has not landed here is simple: lenders are operating with a little more sense.
“Our banks take a more traditional approach such as having the buyer put some of their own money up. As a result, our Banks here are much more liquid,” Yearwood said.
The U.S. mortgage crisis and subsequent real estate slump is the result of questionable lending practices. A few years ago, interest rates fell in the U.S., creating a lot of extra money in the economy. Lending institutions thought a creative way to use the extra cash would be to provide home loans for people with less than favorable credit, creating the “subprime lending” industry. The real estate market began sliding and the borrowers couldn’t make the payments and then came the foreclosures.
Fortunately, little of this has been felt this far south according to Robert Judd, First Caribbean’s head of corporate banking.
“It doesn’t seem to be affecting us,” Mr. Judd said. “Not in a material sense. I have not heard of any projects being cancelled. I believe some of the countries to the north of us have felt some of the effects, but it hasn’t seemed to trickle down to us yet.”
Real estate developer Hastings Daniel of Harmon Services says his company has felt some of the trickle.
“We have a US$10 million project that has slowed down,” said Mr. Daniel. “The investors have decided to put it on the back burner until after the [U.S.] election to see where the economy goes.”
Locally, Mr. Daniel feels the real estate market is good.
“I don’t perceive that the local market has slowed down,” said Mr. Daniel. “The liquidity of our local banks is high and there seems to be little trouble getting financing.”
