The monthly payments of a mortgage loan increased up to 48 percent compared to pre-Covid levels in 2019, due to the rise in interest rates, the increase in housing prices, generalized inflation and the loss in the purchasing power of households , which caused a 15 percent annual drop in the origination of loans between Infonavit, Fovissste and banks in the first quarter of the year.
Enrique Margain Pitman, executive director of loans to individuals at HSBC Mexico and the coordinator of the Mortgage Committee of the Association of Banks of Mexico (ABM), pointed out that there is a slowdown in the pace of credit placement, although the amount has increased due to inflation, which affects lower-income workers, causing their loss of profile.
According to a comparison made by the manager, in March 2019 buying a home with an average value of up to 1 million 71 thousand pesos at a weighted rate of 10.4 percent, left buyers with monthly mortgage payments of up to 9 thousand 201 pesos.
Four years later, in the same month of 2023, housing costs an average of one million 601 thousand pesos, which at a weighted interest rate of 10.25 percent leaves Mexicans with monthly mortgage payments of up to 13 thousand 625 pesos, a 48 percent higher than pre-pandemic levels.
“The increase in the cost of materials, the increase in the cost of financing for developers, which end up impacting the cost of housing and interest rates, what has caused is that the monthly payment for people has increased what they have to put for the down payment, makes many people lose profile, especially in the lower income segment, that’s why we see drops in placements,” he said.
Margain pointed out that according to data from the National Banking and Securities Commission (CNBV) to the first quarter of 2023, between Infonavit, Fovissste and the banks they placed 96 thousand 400 credits, which represented a drop of 15.1 percent with respect to the 113 thousand 500 credits placed from January to March of last year.
This origination represented a financing amount of 105 thousand 300 million pesos, 2.2 percent more than the first quarter of last year.
Meanwhile, for the accumulated of the previous year, in 2022 a total of 491 thousand 500 credits were placed, 13.6 percent less than the previous year, while in amount it meant financing of 481 thousand 900 million pesos, 2.1 percent more than in 2021.
“What is the behavior that we see throughout the first three months (of the year)? With official data, the same a drop in the number of loans, but with a slight increase in the origination amount, we continue to increase the average ticket, the average ticket of the banks is already over 2 million 100 thousand pesos”, he explained.
Mortgage banking records low delinquency rates, with longer payment terms
The commercial banking mortgage sector reacted quickly to the changes in the pandemic in the mortgage market, which helped to maintain low delinquency rates and offer attractive credit product schemes so as not to harm home buyers, said Roberto Gándara, director Executive of Mortgage Credit of Grupo Financiero Banorte.
“Banking became much stronger, past-due portfolio indices are low, in the case of Banorte we had levels close to 1 percent, today we have less than 0.85 percent. On the origination side, the portfolios continued to grow even in times of pandemic,” he said.
He added that, with the pandemic, the arrival of proptech has also accelerated, which could help the mortgage sector to increase placement in the coming months. Meanwhile, Gonzalo Palafox, executive director of Mortgage Credit at Citibanamex, added that, although there is dynamism in the market, financing processes must be improved to adapt to post-pandemic changes.
“Technology can make the origination process friendlier, but also the credit structure because basically all the products are fixed rates, fixed payments, there are some rates that are increasing payments, but there could be some issues where the client can certain times to raise their payments, I am talking about issues that do not yet exist and could develop, ”he said.
Enrique Margain Pitman, coordinator of the ABM Mortgage Committee added that extending the terms of the debts of homebuyers with a mortgage has helped alleviate the high costs of financing.
“One of the things that the banks have done was to move the financing term from 20 to 25 years in several of their destinations and that has the consequence that you can help with the monthly payment of the person who does not have these increases and promote all the schemes increasing pay,” said
The executive added that commercial banks must diversify with the origination of new products with institutions such as Infonavit and Fovissste to increase the number of mortgages and housing financing, and thus help reverse the effects of the Covid pandemic and inflation in the mortgage sector.
2023-06-13 12:17:01
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