Mortgage credit growth margin begins to dry up

Although the prospects for the mortgage credit granted by the banks are not fatalistic, a scenario of moderate growth is expected, where the interest rate and demand are affected by the current macroeconomic environment.

In the presentation of its Report on the Real Estate Situation in Mexico, BBVA Mexico analysts indicated that in an environment of rising reference interest rates by the Bank of Mexico (Banxico), the rate of the mortgage credit it has increased to a lesser extent and it is expected that for the first quarter of 2023 the average will be higher than 10.50%, when they could end the year between 10.20 and 10.40 percent.

“The benchmark for the mortgage market are the 10-year bond rates, the M10 bond, and despite the fact that there has been a notable increase in the yields of the M10 bonds, where it would have been assumed that yields would increase more mortgage rateswhat we have seen is that they have increased to a lesser extent,” said Carlos Serrano, Chief Economist at BBVA in Mexico.

“Going forward, consumer confidence in the housing sector has fallen significantly and this could moderate going forward in housing loans,” added the economist.

Despite the fact that this scenario is expected to have an impact on the placement of the mortgage creditFor Samuel Vázquez, chief economist at BBVA Research Mexico, the dynamism will depend on demand, since if the placement is focused on people with lower risk, the rate in its weighted average will be below 10.50%; however, if the customer base expands, possibly said indicator will be higher than expected.

“We would not expect mortgage rates to drop, but more gradually from the change in monetary policy until the end of 2023,” Vázquez said.

As of June 2022, the mortgage credit Banking grew 5.5% by number of loans and 3.9% by amount financed, in a scenario where public organizations, such as Infonavit and Fovissste, had significant falls in both indicators, even in double digits.

In the most recent meeting of the Banxico governing board, it was decided to raise the interest rate by 75 base points, to place it at 10% and thus add 12 consecutive increases since July 2021.

“Again there is no science, the rates (of the mortgage credit) are going to go up”, declared Vázquez.

Tourist states gain ground

When carrying out an analysis of the entities with the best behavior in mortgage creditBBVA Research found that although the dynamism has been maintained in the main economies of the country, as has happened in recent years, a change that has begun to be noticed is the greater participation of tourist states in said market.

“We have seen the repositioning of some entities. States with a tourism focus have gained positions, where the GDP of the lodging sector, lodging, food preparation, have a greater relevance (tourism),” said Vázquez.

In this context, the specialist pointed out that although before in these states, such as Quintana Roo and Nayarit, they opted for the placement of social housingCurrently, these entities present a greater demand for medium-sized and residential properties, which makes them relevant for these housing segments.

“We are experiencing a greater displacement of average housing and of greater value and this causes it to rise positions, that is to say, that both the people who inhabit these entities seek living place of higher value and there is an investment factor related to the tourist part, famous for short-rental schemes,” declared Vázquez.