Thursday , January 27 2022

Mortgage loan, boom that has been pulled and will delay return – 13/01/2019



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One of the factors explaining the increasing activity in the real estate market from mid-2016 to mid-2018 was the re-emergence of a mortgage, especially for UVA, ie loans with a share – and residual debt – adjusting to inflation. For this reason, the virtual disappearance of mortgage loans due to devaluation and wage depreciation, measured in dollars, explains the collapse of real estate activity and the fall in property prices.

Since 2016 T 120,000 of this kind of creditbut the beginning of the dollar, which started in April 2018 and did not stop the acceleration until October, froze this operation, although it left an argument: if those who used UVA credit they used the opportunity move from tenants to owners or, if they can lose their house could not face too high quotas.

The debate intensified, as in 2018, inflation and hence UVA quotas increased faster than wages.

Nevertheless, crime is negligible, and does not affect more than one in every 1000 credits.

This can be explained by the fact that despite the increase in quotas, the share-income ratio was changed, but much easier – if the loan started with a 20% quota and income ratio, today, this relationship is 25%.

Another factor to consider: UVA debtors who have to tighten their belts to increase their quota do so as owners. As tenants, if the lease is renewed, they will suffer from a monthly adjustment of the salary, possibly in line with inflation.

So far, a panorama that faces those who have already used UVA mortgage loans.

In a worse situation, of course, there are also those who failed to get to the wave. Today they suffer "double nelson": a strong increase in peso values ​​for property values ​​and pay left. In short, much more pesos is needed to buy the same property, but since no salary was added, the initial fee, which is so high in relation to family income, leaves the loan unattainable.

The question is when a mortgage loan could be converted. "This is not an inflation rate that converts the loan amount but the price of the dollar. Rounding: details increased (pesos) 100%; inflation 50% and salary 40%," said the specialist Ergasto Riva, which means that until the salaries are converted into dollars, the credit will not be activated.

It does not seem to be soon, given that the government is ready to keep the positive part of the devaluation – lower wages in dollars – an idea expressed by maintaining a competitive exchange rate.

In any case, the government took some measures to ease the situation.

This is acknowledged by Alejandro Bennazar, head of the Argentine Real Estate Chamber, pointing out the possibility that mortgage loans can finance so-called "wells". This would allow builders to finance funds invested in real estate by final buyers and to ease the financial cost of real estate development. This reduces the cost for a builder who – or devaluation – is 30% lower than a year ago.

"Today is a great time to face construction, as costs have dropped significantly," agrees Jean-José Cruces of Di Tella University.

Obviously, shortening distances with a dream of home will take time.

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