The return of mortgage loans in Argentina tries to stop being a promise and become a reality. In just under two months, More than 20 public and private banks announced new lines for the purchase, expansion and renovation of homes with UVA-adjustable installments. In the entities they speak of a boom of consultations, but both banks and the real estate sector recognize that there is still a need for greater stabilization of the macro so that this demand takeoff.
With their own characteristics depending on each entity, the banks once again offered financing for 20 or 30 years with quotas tied to the evolution of inflationaccording to the UVA index (Value Added Unit) created in the government of Mauricio Macri, plus a rate that ranges from 3.51% to 8.5% annuallydepending on the bank and the particular conditions of each credit.
After the round of launches, some banks are already beginning to generate the first operations, although they warn that it will take a few months for “the wheel to get moving”, due to the very logic of a mortgage loan.
This requires several steps in addition to the prequalification credit, especially in the case of the buyswhere once pre-agreed amount with the entity that grants the loan You have to choose the property to buy.
However, the interest of the middle class is very high. In it hipotecary Bancthe entity that took the lead with these new loans and offered financing for up to $250 million for the purchase of a property and $125 million for the expansion and renovation of properties, they reported that there was already 115 thousand simulations on digital channels and were realized 15 thousand visits at the branches to proceed with the process.
In it CityMeanwhile, a month after the announcement, the first operation was completed and in the last week they were disbursed five more new credits. The director of the Buenos Aires entity, Matias Rossihe commented in dialogue with Clarion: “We really had a alluvium of queries. We saw a lot of interest too in the Microcenter area, where we offer a rate differential of 3.5% plus UVA. It is true that in recent weeks, after that initial boost, the growth volume of those queries it slowed down a littlebut we see that the latent interest is very high.”
For its part, Jose Bandindirector of the Commercial Bank of Santander Argentinapointed out that in his entity There are already 3,200 people who presented the necessary documentation to move forward with the purchase of the home. “The expectation we see these days was the expected one for the target audience in this first launch, where the line is available to clients with salary accreditation, even more so considering the absence of the product in the entire financial system for almost 5 years,” he said and added: “We believe that as clients continue to become aware of market conditions and property values, these queries will increasingly become specific requests.”
The entity offers to finance up to 75% of the purchase of a propertywhether for a first or second home, but does not set a limit on the total amount, provided that the income-to-quota ratio does not exceed 25%. 70% of the applications are individuals between 35 and 55 yearsand 83% of applicants are singleThe vast majority, 95%, corresponds to the sector “high income” of this bank’s client portfolio and request financing for permanent housing.
The doubts of the market
The two primary factors to ensure that more people can apply for financing to access housing are the exchange rate and inflation.
Although banks lend pesos, in Argentina properties are paid in dollars. And, in an economy where stocks and exchange restrictions persist, uncertainty on this front can act as a brake.
The fee tied to the UVA serves to prevent the loans from being “liquefied” as the months go by, but with inflation still high It can also be a brake for those who are considering financing in this way.
In mid-April, when the first banks took advantage of these loans, the parallel exchange rate was stable close to $1,000In just over six weeks, the blue and the financiers rose around 30%which changes the equation for many of the early simulations that were done.
“In Argentina, a week can be equivalent to a year in exchange terms and with that Savings for something as vital as housing are diluted“, said the president of the College of Notaries of the City of Buenos Aires, Jorge Di Bartolo. He added: “Winning time is making money. In a US$100,000 operation, if (the dollar rate) moves by $200 You’re already talking about $20 million more. that are needed to close a transaction.”
German Ghisoni, director of Commercial Banking at Banco Galicia, stated that the entity thought about a “flexible” line of credit to contemplate these exchange fluctuations and not limit its clients’ access to credit. “The credits we present They do not have a funding limit and they also allow up to 3 co-signers to be added. This is so that, if there is a difference in the exchange rate with respect to the approved loan, you can request an increase in that amount so as not to lose the property you want to buy,” he explained.
In Galicia More than 10 thousand applications have already been processed, of which 50% were pre-approved.. Last Friday the entity completed the first mortgage of this new stage and the expectation for the growth of this line of credit remains high. “We believe that demand will settle down as the macro variables stabilize. The main factor that clients analyze is the relationship between income and inflation. But if you look at long timelines, in general wages and inflation always go hand in hand“.
Ghisoni said that “in Argentina, mortgage loans are only 0.4% of GDP, when in the region The average is 30% of the product. Therefore, the opportunity and potential for growth is enormous.”
In this sense, the economist Juan Pablo Ronderospartner and founder of the consulting firm MAP, said: “In Argentina, the demand for mortgage loans is infinite. Practically there is no long-term financing And although the banks’ offer is beginning to appear, it still seems that the conditions for supply and demand to meet at the same point are not given. And it is not the banks’ fault: the economy is still does not have the elements to make these credits attractive with a medium and long-term view.”
He said: “There is still no stable currency and inflation is still too high to be able to think of a boom in these credits. Inflation needs to fall to a single-digit annual rate, the restrictions need to be lifted, and uncertainty about devaluation jumps needs to be removed so that this scheme can really take off and become attractive.”
Both in the banks and in the real estate sector, expectations are very high. They say that, despite the doubts related to the macro context, it is a good time to buy a property. And on the downside, they all agree on the current market conditions: “Prices are very depressed: Today they are 25% below their last peak, in March 2018. As salaries begin to rise with respect to inflation, we are going to see a consolidation of this demand,” they say.
