In the midst of the resurgence of UVA mortgage loans, the Central Bank decided to remove a rule that obliged banks to extend the term of the credit in the event that the evolution of inflation exceeds that of salaries. In its replacement, it established that banks “must pay special attention to the fee/income relationship” when granting credit in the event that the UVA grows above salaries.
This benefit, important for loans tied to inflation, will no longer be in force for the new batch of loans that banks were announced in recent weeks.
The repealed rule obliged banks to offer UVA loan takers “to extend the number of installments originally planned when the amount of the installment to be paid exceeds by 10% the value of the installment that would result from having applied an adjustment to that loan. capital by the Salary Variation Coefficient (“CVS”) since its disbursement.” In that case, if the installment calculated by inflation (UVA) exceeded the installment calculated by salaries (CVS) by 10%, the borrower could choose to extend “up to 25% the original term” of the creditso that the fee is not so burdensome.
Several of the 14 public and private banks that are already granting mortgage loans noted the existence of this benefit at the launch of their lines, as a form of protection against an eventual jump in inflation.
That rule had been issued in 2018, when inflation had shot up well above the rates recorded in 2016 and 2017, at the peak of UVA mortgage loan granting. It was then understood as a cover for the public to face the rise in inflation without falling into default in a key credit for any family such as housing.
Yesterday, the Central Bank decided to change that criterion. Instead, he simply mentioned that “at the time of granting financing to human persons, Special attention should be paid to the fee/income ratio so that the debtor can face possible increases in the amount of the installments without affecting their ability to pay, taking into account that Your income may not follow the evolution of the Purchasing Value Unit updateable by “CER” (“UVA”).”
Several of the 14 public and private banks that are already granting mortgage loans noted the existence of this benefit at the launch, as a form of protection against an eventual jump in inflation. “An extension of the term can be requested if the amount of the installment to be paid exceeds 10% of the installment value resulting from having applied a capital adjustment to that loan by the CVS since its disbursement,” the city Bankwhich has already reported the first loan actually granted with its new line.
“The BCRA establishes that if the installment exceeds the value adjusted by the CVS by 10%, the loan term will be extended by up to 25%,” the Bank of the Sunanother entity that highlighted the benefit for the borrower.
According to sources from the financial system, the Central Bank’s reason for removing this protection is due to mortgage securitization plans in this new stage of housing credit with real guarantee. This operation allows banks to go to the market with a security backed by the payment of loans, to obtain more funding and liquidity. To “securitize” these mortgages it is necessary to standardize them, something that becomes complicated if the loans have the option of modifying the term or changing the way the installments are adjusted, from the inflation index to the salary index.
In the event of a strong rise in inflation that exceeds the increase in salary, each bank could offer (or not) a coverage mechanism for its clients, with or without cost to them.
In this way, giving that protection to the client It will no longer be mandatory for banks. The Central points out that there are other coverage mechanisms, but of discretionary application for financial entities. Thus, each bank may offer (or not) its own protection method for those who take out a loan to buy their home. And that coverage it would become another commercial conditionit will no longer be a regulatory obligation.
In the event of a strong rise in inflation that exceeds the increase in salary, each bank could offer the extension of the term, absorb the excessive increase in the fee, do so with only a part of that surplus and have the client pay the rest. , or any other alternative option.
In this sense the National Bank, which recently announced its line of UVA mortgage loans to which it added an optional mechanism to assure the client a ceiling for the payment. Of course Those who choose to have that peace of mind will have to pay a higher fee.
As explained by the Nation, its line +Households with BNA “It has an additional benefit; those clients who receive salaries from the BNA, can ‘cap’ the quota applying to the loan an adjustment through the salary variation coefficient for an additional cost of 1.5% per year”. The president of the Bank, Daniel Tillard He explained that “these differences will be transferred to the end of the loan once the program ends, both through a personal loan or by extending the mortgage. Only after 180 days can the use of this option be exercised.”
