MEXICO CITY (El Universal).— Mortgage loans have become more expensive due to the increased demand brought about by the Infonavit co-financing modality and the higher price of real estate, experts say.
When granting loans to buy a house or apartment, regulated banks, Sofoles and Sofomes charged an average rate of 11.55% in May, the highest interest rate since December 2022, as well as the second highest in 11 years. However, there are institutions that have been charging a maximum rate of 22.75% per year for more than a year, the highest since records began at the Bank of Mexico (Banxico), starting in 2004.
To determine the interest they charge on mortgages, banks use Banxico’s reference rate, which fell from 11.25% to 11% last March, and is expected to fall to 10.75% next month, according to the most recent survey that Citigroup applied to 34 private institutions.
Most banks maintain high interest rates to combat inflation, which makes housing credit more expensive and generates indirect effects on the rental market, although mortgages in the country do not react immediately to the evolution of the Banxico rate, since there is a lag of three to six months, explained Leonardo González, country lead in Mexico of Algorym, a data science and machine learning company.
“The fact that the mortgage rate is at 11.55%, higher than Banxico’s rate of 11%, is reflected in higher prices for houses and apartments,” he said. “Mortgage lending is determined by a high need for housing in the country, where demand far exceeds supply, leading to sustained price increases. It is difficult for the average mortgage rate to return to less than 10% this year,” González added.
In his opinion, the situation frustrates young people, whose possibility of owning their own property has become almost impossible, since a demonstrable income of around 50 thousand pesos per month is required for an average mortgage, which generates a spiral of demand and an increase in housing prices.
Banks win
For González, Infonavit co-financing, which allows for part of the loan to be granted by the bank and the other by the institute, provides the opportunity to acquire a higher-value home.
Analysts estimate that banks will benefit from increased demand for mortgages under the Infonavit co-financing modality, since there are 10 million people with the option of taking out a loan with the institute, an increase of 50% of the population in the last five years.
Humberto Calzada, chief economist for the Rankia Latin America financial community, said that mortgage demand increased due to the Infonavit co-financing modality and the facilities provided by the institutions.
“With rents rising, it is also possible that consumers will prefer to take out a mortgage rather than continue paying rent,” he said in an interview.
Banxico’s interest rate fell by just a quarter of a point in March, so it remains at a high level, while the rise in mortgage demand allows banks to raise their rates on a business basis, he said.
Following the spike in inflation in June, Calzada projected that Banxico will leave its rate unchanged in August and mortgages will remain high for longer.
“We will not see an average mortgage rate of less than 10% again until the second half of 2025,” the official said.
Prices through the roof
The Federal Mortgage Society reports that houses and apartments with mortgages had an average price of 1.7 million pesos in March, three times more than a decade ago.
Enrique Margain, executive director of personal loans at HSBC Mexico, explained that for an average loan of 1.68 million pesos, the interested party must have a salary of 48 thousand pesos per month and pay a mortgage of 14 thousand 400 pesos.
Complicated moment Mortgage loans
Banks across the country are not granting loans because they ask young people for many requirements.
Need for housing
Financial institutions have agreed that right now is a difficult time for the young population in general, because even when they seek to obtain a loan for a home, they are not granted any.
Difficult situation
Banks are looking for ways to provide new financing facilities, said Enrique Margain, executive director of retail lending at HSBC Mexico, as he noted that “housing prices are rising faster than inflation.”
Other possibilities
Margain believes that credit pooling schemes between couples or family members offer more possibilities for acquiring a property, something that young people or people of any age can take advantage of to acquire a home.
#Mortgages #expensive
2024-07-27 03:23:45
