The Real Estate sector in Colombia faced economic challenges but interest rates may drop

Buying a home is one of the main objectives of most Colombians, however, the real estate sector has registered a decrease in its commercialization due to the economic situation of rising interest rates from the Banco de la República and high inflation.

Although the Banco de la República continues firmly with its monetary policy of raising interest rates that are located at 13.25%, most banks have reduced their rates to alleviate the pressure on the pockets of Colombian households.

Financial entities such as Bancolombia, Davivienda, Banco de Bogotá, Banco de Occidente, Bbva, Pichincha and Scotiabank Colpatria decided to lower their rates for credit cards by more than 50%. In addition, experts affirm that they could continue to decline.

In recent days, this measure has been included in other segments such as mortgages, which is why today interest rates are between 11.90% and 14.10% effective per year (EA) for low-income housing (VIS ), and between 14.40% and 18.60% EA for non-VIS dwellings.

For Jackson Rozo, CEO of Bankiando, a Colombian fintech that provides free advice to people who are in the process of buying a home, “the rates are not entirely affordable, the ideal would be to reach 12% or 12.5% ​​EA. Even so, people feel confident and motivated to buy a house, mainly for investment, because the monthly value of the leases has risen and this somewhat cushions the cost of the interest rate of the credit”.

What should you take into account to apply for your mortgage loan?

Among the aspects that Colombians must take into account to obtain a mortgage loan, in addition to calculating the interest rate very well, is the fact of validating the cash flow and with this, the maximum value that can be paid for the monthly installment of the credit, as recommended by the director of Bankiando.

Likewise, it advises that people, in the event that they cannot bear long-term debt, demonstrate additional income. In many cases, an option that facilitates this process is to join someone from the family group to study and apply for the loan, so that they can support the management with their income.

It is also essential to seek the support of financial experts, specialists in home financing who, knowing the needs of each client, provide information on various loans from different entities, as well as their financing options, in one place. And, as far as possible, avoid excessive consultation per month of credit history in credit bureaus.

Can read: Why is it getting more expensive to buy a home in Chía and Cajicá?

Is a mortgage loan or a housing lease better?

In this sense, Jackson explains that “if a person needs financing of 80% or more, leasing is a good option. However, in the market this does not have portfolio purchases, which means that the interest rate that is agreed from the beginning lasts throughout the term of the credit. On the other hand, with the mortgage loan, if the client needs 70% or less, the property remains in his name. In addition, this is optional for a portfolio purchase, over time the interest rate can be renegotiated and, if necessary, a property remodeling can be leveraged.

According to the CEO of Bankiando, knowing whether interest rates on mortgage loans will continue to fall is something that depends, to a large extent, on inflation and the ability of the Banco de la República to ‘surf’ the increase within its monetary policy intermediation rates, taking into account that the intermediation margin is the indicator that measures the difference between the interest paid by the entity to which it requests money and the interest charged to the lender.

You can read: They warn that the property tax could skyrocket in Colombia, why?

“There is a very good expectation and willingness of the banks to reduce interest rates on housing loans. How much they could drop is difficult to predict, but what I do believe is that portfolio purchases will strengthen in the second half of the year and entities are preparing to retain their customers and not lose market share,” he concludes. Rozo.