The supply of mortgage loans in Mexico has diversified in a big way during recent years,thanks in part to structural improvements,a more competitive environment,low interest rates,the recovery of the commercial real estate sector and the growth of new housing needs,according to a Fitch Ratings report.
“In Fitch’s view,the new structural dynamics in the Mexican mortgage industry has enlarged the product range offered by the entities involved in the industry,including state-owned lenders and private lenders,and it has made them adapt to the new housing needs in the country,” wrote Reuters. “Also,the recent reforms to the mortgage sector,which make it faster and less costly to transfer mortgage loans from one bank to another,will intensify competition among banks and will maintain competitive interest rates that will benefit mortgage borrowers.”
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New financial reforms in Mexico have made it easier (and less costly) than ever to transfer a mortgage from one bank to another,which created a more competitive environment among mortgage lenders. This is good news for buyers because experts believe the increased competition will also help curb the upward momentum of interest rates,Fitch Ratings reported.
Mexico’s financial reforms were enacted in January 2014 under the Law of Transparency and Promotion of Competition within Guaranteed Credit. Although mortgage transfers in Mexico were possible prior to the reforms,their high costs deterred many customers from transferring to obtain a better interest rate.
“Mexico is hoping that better transferability of mortgage loans will result in competition that aids home affordability across the market,” wrote Fitch. “Mexico’s mortgage borrowers have exhibited relatively low delinquency rates and a good history of growth.”
In summary,Fitch expected banks in Mexico to continue realizing a fair amount of growth in mortgage lending as slower increases in interest rates keeps mortgage rates competitive for borrowers.
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