mortgage rates |Mortgage rates may rise more in 2018

Mortgage rates may rise more in 2018






The 2017 increases in mortgage loan rates still do not fully reflect the increases at the benchmark rate that the Bank of Mexico has made, an institution that could execute more increases in the face of inflation and other factors.



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Monday, January 29, 2018 at 11:56
BY Editorial Works
MEXICO CITY - Although mortgage rates began to increase in Mexico in 2017, they have not yet fully reflected the increases at the benchmark rate that the Bank of Mexico has made; however, that could start happening this year, according to the specialized web platform Propiedades.com.

Mortgage loan rates are no longer at the historical lows of a few years ago, when they were approaching 10 percent. In March 2017, they reached their highest peak of 11.02 percent. However, they are still at competitive levels, according to the portal.

"The main reason that explains this trend is due to the intense competition that currently exists among mortgage instruments to increase their penetration among users who purchase a home," explains Leonardo González, a Real Estate analyst at the site.

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Mortgage rates are rather long-term rates, so they are less reactive to volatility in the exchange rate or to a greater inflation gap with respect to the Bank of Mexico's target rate, González explains.

For example, while inflation was 6.8% in 2017, in the housing sector it was more contained and reached only 5.3 percent.

González says that 2018 will be a key year for the housing mortgage sector, since its penetration will depend on inflation, the renegotiation of the North American Free Trade Agreement, the exchange rate and the elections on July 1.

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The analyst anticipates that the loans will follow the 2017 standard: for new housing, in the middle segment, at a fixed rate and at 19 years.

To increase mortgage rates, he mentions, "there would be a contraction in demand, which would deepen the discrimination of new loans to residential and residential plus segments."