Understanding the Impact of Rising Interest Rates on Mortgage Loans

Due to inflation, in 2022 the mortgage market registered some variations in its interest rates that affected some borrowers in the payment of their loans, therefore, in June of this year, Banco de México (Banxico) decided to contain, for the second time , the reference rate at 11.25%, however, sooner or later it will rise again, what does it mean?

If said reference rate increases, and the requested mortgage loan has a variable interest rate, this will be modified according to the changes of the Central Bank, this means that the amount of the installments either goes down, but it can also go up, this will depend on the adjustment to be made.

Considering the above, the digital platform for mortgage loans, Yave, recommended that before purchasing a house, all the requirements be considered, but also future scenarios such as the Total Annual Cost (CAT), the flexibility of the credit, the opening commission , the type of interest rate, budget and financial stability in the medium and long term.

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Now, when you already have a mortgage, many recommend having a fixed interest, so you know throughout the life of the credit how much you will pay, regardless of the variations made by Banxico, since the amount will not be affected .

However, if a variable rate is chosen, you must pay attention to the amortization table, since it indicates what percentage it is and how it will affect the credit installments, how many monthly payments remain, the amounts and when they must be paid.

To avoid interest rate pressures, Yave recommends making a monthly budget that considers income and expenses to maintain a healthy economy; In this sense, the co-founder and CEO of Yave, Bernardo Silva, recommended “revising the CAT and that it be at a rate that suits you.”

And in the event that you already have a mortgage loan, you must consider the impact of “changes in the interest rate may have on your loan if it is at a variable rate, or the percentage in the rate of future loans that you are going to request ”.