Due to the increase in interest rate reference made by the Bank of Mexico (Banxico), some types of credits could be affected with higher payment amounts, and although it may not seem like it, this can actually affect even the availability of jobs.
Banxico made this historic rise of 75 basis points in the reference interest rate to combat the inflation that affects all Mexicans. But with this maneuver, some credits like those with a variable interest rate they will be affected.
What type of loans will Banxico’s interest rate increase affect?
In Mexico, credits can be divided into two large categories: equity credits and on the other hand the payroll loans, credit cards and for companies.
The most common is that the equity credits are at a fixed ratesthis means that the interest rate announced by Banxico will not affect payments.
These types of loans are, for example, mortgages, this is loans for housing or for the purchase of land, and also car loans.
On the other hand, payroll loans, Credit cards and credits for companies, are commonly variable interest ratee, so they will begin to receive increases.
These types of payments have a monthly payment, just like a credit card, and your minimum payments will receive an increase.
Also, credit card debt may have increased interest payments on the unpaid balance. Therefore, it is best to avoid debt and prefer fixed interest rates.
Likewise, companies that maintain a debt through current account credit, revolving credit or another type, will also be affected.
How does the increase in the interest rate affect credits and employment in the future?
With this panorama, Carlos González Tabares of Monex Casa de Bolsa foresees two possible scenarios in credit demand.
One is that there will be less boost to employment by the Mexican sector, this due to the caution of investors, companies and consumers due to rising costs, directly affecting consumption and productive projects.
Two, there are possibilities that there is greater caution on the part of the banks when choosing to whom they grant credits, hoping to avoid clients who cannot meet their payments.
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On the other hand, interest rates are expected to continue to rise in Mexico, possibly ending up as high as 10%.
This taking into account the global economic panorama, since in the whole world the real interest rates show negative levels. This means that interest rates are below inflation, to which central banks could continue to increase this rate.