The granting of mortgage loans fell to its historical minimum

2023-06-11 05:51:18

In a real estate scenario in which many owners want to sell and few buy, In addition to an excess demand for rent and few properties on offer in that segment, the granting of mortgage loans today is at its historical minimum.

Thus, for example, in CABA the Index of Accessibility to Mortgage Credit (IACH) for the purchase of a two-room apartment recorded a record low of 27.9 points in the fourth quarter of 2022.

In other words, the income of a couple looking to buy a two-room apartment represented a quarter of the minimum necessary to access a mortgage loan. Thus, the couple would have to more than triple their income to qualify. As a reference, the average value of renting a similar home represented less than a fifth of the value of the share.

In this way, with almost impossible access to these credits and unpayable installments, since December 2019, the participation of the mortgage loan fell from 9.6% to 5.1% of the total credit granted to the private sector, according to the Fundación Libertad y Progress.

According to analysts, inflation puts a lot of pressure on the rates that banks charge to grant a loan, added to the fact that the speed of adjustment of real estate prices and loan rates is faster than that of wages.

One option that seemed savior at the time was UVA credits, but they ended up leaving a large number of bad loans. These mortgage loans are tied to the Purchasing Value Unit (UVA) index, whose value is updated daily based on the Reference Update Coefficient (CER), which measures the evolution of prices and is informed by the BCRA.

Since December 2019, the participation of the mortgage loan fell from 9.6% to 5.1% of the total credit granted to the private sector

In other words, in nominal terms, the quota increases month by month due to high inflation. For borrowers it is somewhat detrimental, although it makes it easier for banks to grant more loans because they say that since the quota does not liquefy with inflation, the credits do not need subsidies and can be scalable and sustainable over time.

This week it was learned that several projects are circulating in Congress to address the default on UVA credits, something that was criticized by the banks because “they could compromise the sustainability of mortgage loans.” The Association of Banks of Argentina (ABA) and the Association of Argentine Banks (Adeba) assured that these projects “hinder the development of mortgage credit” and that “although the objectives are laudable, they would lead to opposite results.”

“Most of the projects propose the compulsory recalculation of quotas retroactively, the imposition of new charges and contributions also retroactively, and the setting of maximum rates, among other elements that will affect access to housing in the future. This would be a relief at most for the 100,000 families that have already agreed to buy a home (with UVA credits), but it would harm the three million families that have housing problems,” they said.

To this would be added the lack of “positive impact on income and employment that activities related to housing construction have, which with the approval of the aforementioned projects would not occur.”