Private loans are contracted
During the period from January to May 2024, private banking in Mexico registered a 4.8% decrease in the provision of mortgage loans compared to the same period of the previous year. This contraction is attributed to lower demand in the high-value segments, which has been impacted by the increase in interest rates in the last two years. In contrast, Infonavit originated 21.9% more mortgages in that time.
“We attribute this to lower demand in high-value segments due to the high growth of the previous two years; while in the case of Infonavit it is a statistical effect due to the low placement it had previously,” said the BBVA specialist.
In the case of Multiple Banking in Mexico, mortgage loans for new and used housing and liquidity, among others, recorded a peak of 10,701 loans in December 2023. By June 2024, the figure fell to 8,569. If the two semesters of both years are compared in this same line, the drop is 6.15% annually.
Various specialists argue that mortgage interest rates in Mexico have not moved as much as short-term rates in the last two years. And, for the same reason, rates for purchasing housing are not expected to fall below pre-pandemic levels. Therefore, there will be few opportunities for refinancing.
According to the Bank of Mexico, the average mortgage rate in the first quarter of 2024 was 11.5%. At the end of 2020, in the first year of the pandemic, it stood at 10.35%.
There is no alarm about late payments in the private sector
Despite the contraction in the placement of loans, Vázquez Herrera assured that there are no signs of a deterioration in the quality of the bank mortgage loan portfolio. The delinquency rate of this portfolio remains below 3%, which indicates a very low level compared to other sectors. For example, Infonavit reports a delinquency rate of over 15%.
Infonavit, a six-year review
Infonavit has managed to grant more than 2 million 493 thousand loans from 2019 to April 2024, generating an economic impact of 1.2 billion pesos, the highest figure recorded during a six-year term.
This growth is due in part to the implementation of new credit schemes and the modification of the scoring system, which has facilitated access to financing for a greater number of workers, the institute announced in a recent statement.
