Credit demand has not diminished due to increases in interest rates, bankers say

Until now, the rise in the reference interest rate by the Bank of Mexico (Banxico) to try to contain inflation, has not been reflected in a decrease in the demand for bank credit, assured Daniel Becker Feldman, president of the Association of Banks of Mexico (ABM).

Interviewed in the framework of a Prosa forum, the banker considered that there will not be a lower demand for credit in the remainder of the year.

According to the Monetary Aggregates and financial activity of Banxico, last August the credit portfolio of commercial banks to the private sector grew 3.4% in its real annual comparison, with which it string five consecutive months of increase, after falls for the pandemic.

The president of the ABM highlighted that even, in nominal terms, practically all segments of bank credit are already registering a positive behavior, and some with a double-digit increase.

He explained that the rise in the reference rate is not yet reflected in a lower demand for credit, given that, on the one hand, there is always a delay between demand and rates.

“Statistically speaking, history has also taught us that the demand for credit is much more associated with an expectation of economic growth than with an interest rate issue,” he said.

In this sense, he pointed out that as long as expectations of economic growth continue to be seen, the estimate is that there will not be a lower demand for credit in the remainder of the year.

Mortgage rates would stop being single digits

What the president of the ABM did recognize is that it is likely that mortgage credit rates will no longer be in one digit – the level at which, on average, they have been in recent years – given that the 10-year bond years -which is the one that is normally taken as a reference for housing financing in the country- is already close to 10%.

“As much as it is an element of competition, we are probably already starting to see low double digits, and that is why it is important to anchor inflationary expectations,” he pointed out.