At least one commercial bank has acknowledged that the demand for consumer loans is down significantly in the first quarter of the year, while another is urging greater confidence in the Barbados economy.

The news comes as concerns mount about slowing economic activity worldwide and a looming recession in the United States.

Vivien Croy, Royal Bank of Canada's manager of personal financial services, told BARBADOS BUSINESS AUTHORITY on Friday that consumer loan demand had sunk by 25 per cent compared to last year.

The banker said trends indicated that some Barbadians had reached their peak
for borrowing and she challenged her colleagues to offer more advice to clients on borrowing within their means.

"Borrowing right now has tightened [and] people cannot afford to borrow as much . . . . Even if somebody qualifies for a loan, it does not mean that it is in their best interest to take it.

"We have customers asking for consolidation; yes, it would make their payments lower, but it extends their debt over five years instead of paying it off in two years, and they pay three times as much interest," Croy explained.

Scotiabank's managing director, Stephen Cozier agreed with Croy on the issue of offering credit advice to clients and that the spending power of Barbadians was impacted by the rising food and energy costs.

However, the top banker who also leads Scotiabank's operations in the Eastern Caribbean said Barbadians should not lack confidence in their economy because
of turbulence in overseas markets.

"People should not necessarily view the Barbados economy through the same lens as you would the economic situation in the US; there are different dynamics at play here.
The credit crunch and mortgage problems are created by a whole set of factors which are not at work here in Barbados."

The Central Bank cut the minimum interest rate on deposits 25 basis points from 4.75 per cent to 4.50 per cent on April 1 in an effort to force lending rates down.