Bloomberg News reported this week that Infonavit,Mexico’s largest mortgage provider,will now offer fixed rate loans for the first time ever,following receding inflation. As early as June of 2012,buyers will be able to get a 30-year Mexico mortgage with fixed rate financing.
Inflation in Mexico has declined to a mere 3.73 percent,falling from an all-time high of 52 percent in 1995,which was caused by the so-called ‘Tequila Crisis’ when the peso’s devaluation led to massive capital outflows. According to Bloomberg,today Mexico boasts the second-lowest inflation rate in Latin America.
“It’s a much more mature country than during the disaster of the Tequila Crisis,” shared Alan Boyce,CEO of the Absalon Project,which is backed by billionaire George Soros and promotes the Danish mortgage model in countries around the world. “Mexico is in a better position than others,as it’s very hard to have a mortgage market when your real interest rates are so high.”
In addition to fixed-rate Mexico mortgage loans,Infonavit also plans to offer mortgage-backed securities in pesos by 2013 to match income with obligations,marking the first sales of this kind since 2004. The lender has reportedly made roughly 4.4 million loans since 2001 – a sign of the growing strength of Mexico real estate.
In minutes published from its March meeting,Mexico’s central bank board opted to leave the interest rate at a record low of 4.5 percent,stating,“If current favorable conditions in the inflation outlook are consolidated,it may be advisable to adjust downward the benchmark interest rate.”
Banco de Mexico will also receive increased credibility on the world stage due to the new offering of fixed-rate loans from Infonavit. The number of loans financed by the lender reportedly increased by a record amount of 2.57 million under current President Felipe Calderon,including a record number of 501,292 loans in 2011.