The ‘war’ on home loan rates intensifies

Two of the largest banks in the country, Bancolombia and Davivienda, with a client base with a significant housing portfolio, will lower interest ratesin a ‘war’ that will benefit customers and at the same time help to revive the sector, one of those that can contribute most quickly to the recovery.

(More: Boosting non-VIS housing, key to boosting economic recovery).

Housing plays a key role in economic recoverysince it is the second activity with the greatest impact on the gross domestic product, with a multiplying factor of 2.9, meaning that each peso invested generates 2.9 pesos in the economy, according to Asobancaria.

And this branch is connected to 56% of the productive sectors and generates 20% of jobs in the labor market.

In the most recent housing report, from Asobancaria, the following is reiterated: need to stimulate the social interest housing (VIS) and non-VIS segmentssince each peso invested in this segment generates 9.6 pesos in the economy.

(Read: Do you want to buy social housing? First premium VIS project launched in Bogotá).

One measure to promote non-VIS housing, according to Asobancaria, is to review the regulatory parameter that determines the percentage of income that households can allocate to the purchase of housing, the LTI (Loan To Income), currently set at 30%.

The union said that the LTI should be made more flexible, bringing it to 40% in the non-VIS segment, equaling this parameter with the one that exists for the VIS segment.

This would allow an additional 1.4 million households to access this market, giving them the opportunity to become potential buyers.

The housing portfolio totals $109.3 billion and represents 18.8% of the total.

And with the aim of moving the figures and stimulating the sector, both Bancolombia and Davivienda presented a housing credit portfolio at 10% with which they hope to increase a portfolio that, despite the deterioration, remains with an average quality, below 3.3% (see graph).

(See: Housing subsidies that you can access in Colombia in 2024: requirements).

Yesterday, Davivienda announced that it will have interest rates starting at 10% for the purchase of new homes.

“We believe that prosperity in Colombia is built by everyone, which is why we have allied ourselves with construction companies, real estate companies and in general with the entire chain that is part of the housing construction sector to jointly announce to the country that we are going to offer rates from 10%, which means a boost to reactivation and a benefit for thousands of families.“said Javier Suárez, president of Davivienda.

Transmission of rate hikes reaches housing credit

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In 2023, the entity disbursed 48,038 loans for $5.7 billion, while as of May of this year, 18,098 loans for $2.1 billion have been disbursed.

The rate applies to clients in the VIS segment who purchase new housing and meet the requirements for access to government programs such as Mi Casa Ya. And a week ago, Bancolombia announced that on July 20 it will be lowered “significantly”, at 10% EA.

(More: Bogotá, Medellín, Cali and Barranquilla, the cities with the greatest housing dynamism).

The new home loans In projects not financed by the bank, loans for acquisition and remodeling, construction of individual housing and purchase of housing portfolio will be 11% EA.

VIS home buyers will be able to apply simultaneously for the ‘Mi Casa Ya’ program subsidy and the new rates, so that, if they meet the requirements to access the subsidy, said benefit will be deducted from the applied rate. The plan will also apply to Colombians abroad who live in one of the 20 countries served by Bancolombia, such as the United States, Canada, Spain, the United Kingdom and Australia, among others.

Holman Rodriguez Martinez
BRIEFCASE