By TERENCE MURRELL, Guardian Business Desk

Figures released yesterday by the Central Bank point to a softening in consumer credit and the domestic mortgage market, and an increase in under-performing domestic loans, supporting the view that the local economy is under pressure following decreases in tourist arrival numbers, cost of living increases (driven primarily by rising oil prices) and the credit crunch in the United States.

According to the Central Bank's 'Monthly Economic and Financial Developments - August 2008', consumer loan arrears grew by $32.8 million (19.1 percent) in August. In addition, mortgage arrears also rose during the month, resulting in overall growth of $28.9 million (11 percent) for the first eight months of 2008.

The financial institution further revealed that banks increased their loan loss provisions by $27.6 million (22.9 percent).

Private sector credit growth narrowed by 20.5 percent to $255.5 million, as net lending for mortgages and consumer credit was reduced by a little more than one-quarter to $145.3 million and $94.9 million, respectively. In addition, 'miscellaneous' loans contracted by $2.3 million, a reverse from the $34.2 million expansion in 2007. Growth in net advances for land purchases contracted by almost two-thirds to $7 million. Net expansion in credit card balances and debt consolidation loans also firmed significantly to $8.9 million and $47.5 million, respectively.

Of concern is a decline in loan quality during August. Total arrears 31 days and over, increased by $114.5 million (21.6 percent) to $644 million, between the period August 2007 to August 2008. Delinquencies in the 31-90-day category advanced by $33 million (11.9 percent) to $311 million.

The Central Bank also revealed that non-performing loans — those 91 days and over on which clients have missed three or more monthly payments - spiked by $81.6 million (32.4 percent) to $333 million. Commercial mortgage arrears also rose by $52.8 million (56.2 percent) over the review period, in both the short and long-term categories.