Former Governor of The Central Bank of The Bahamas James Smith says high unemployment is driving an increase in mortgage arrears in The Bahamas.

"I think it will continue to increase moderately because you still have very high unemployment at almost 15 percent. That is really driving this," said Smith.

Smith told Guardian Business yesterday, "Once you begin to lose your income and you've got obligations for your mortgage, car, school fees and food; you cannot meet all of them sometimes none of them. Then, it takes a while before you get another job... So you are building up bills. Maybe you [are] paying the mortgage last or you are not paying them at all."

The chairman of Colina Financial Advisors Limited (CFAL) was referring to the Central Bank's Monthly Economic and Financial Developments report for January 2016, which stated, "Mortgage arrears firmed by 0.9 percent to $678.6 million, amid respective gains in short- and long-term delinquencies of $3.5 million (2.0 percent) and$2.3 million (0.5 percent)."

"The figures that you would have been looking at now are probably increasing as we speak, because as time goes on the 30-day arrear becomes a 90-day arrear," Smith said.

The report added "Similarly, consumer loan arrears softened by 0.5 percent to $305.3 million, reflecting a $2.9 million (2.9 percent) fall-off in 30-90 day delinquencies, which offset the $1.4 million (0.7 percent) uptick in the non-performing component."

Smith pointed out, "It is easier for a person to qualify to buy a second-hand car than it is to buy a $200,000 to $300,000 house," adding that this explains why consumer loan arrears decreased whereas mortgage arrears increased.

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