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End of the currency controls and rising inflation: what will happen to mortgage loans? - La Nacion Propiedades
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www.lanacion.com.ar
April 13, 2025
The government's announcements will affect a market where properties are sold in dollars.
By Candela Contreras
Santiago Filipuzzi
The government closed a decisive week for the country's future: to begin with, the Consumer Price Index (CPI) registered a 3.7% increase in March. In February, it had been 2.4%. But analyzing the three months of the year, inflation has accumulated an 8.6% increase, and a year-over-year increase of 55.9%, according to INDEC.
Added to this was the government's announcement : the currency controls are ending . The dollar's value will now fluctuate between $1,000 and $1,400—freely floating within that range, meaning no Central Bank intervention.
How could this new scenario affect mortgage lending? "Starting Monday, they will operate with the official dollar, not the MEP," explains economist Federico González Rouco of the consulting firm Empiria.
Credits will no longer be used in MEP dollars.Santiago Filipuzzi
In any case, while he clarifies that it's very premature to make an analysis, he assures that he doesn't foresee "a chaotic situation" for the exchange rate . "The MEP—which was the dollar used to compare the UVA—was already above $1,300," he explains.
Regarding the impact of the increase in inflation , he also doesn't believe it will affect those in the qualification process, although it will affect the installments on existing lines, which, since they are UVA, are adjusted for inflation . The analysis is that if the exchange rate adjustment impacts inflation and continues to rise in April, UVA installments will become more expensive.
Loans in Argentina are highly dependent on inflation , as the UVA (UVA) is adjusted daily according to the Consumer Price Index (CPI), which allows for a low initial balance. However, in an economy with a history of inflation, the risk of increases over time is high.
In the last six months, monthly payments on these loans have increased by 15.9% . Therefore, rising prices and economic volatility can be factors that complicate access to financing.
Inflation directly impacts mortgage loan paymentsSuperOhMo - Shutterstock
2024 closed with an inflation rate of 117.8% , but what is expected for 2025?
According to projections from the latest LatinFocus report—produced before the announcement of the lifting of the currency controls and the March inflation figures—which compiles estimates from more than 50 banks and consulting firms, inflation is expected to reach 26.6% by the end of the year . With hindsight, this projection is difficult to achieve considering that in just three months it reached 8.6% . In other words, it shouldn't increase more than 1.8% to 2% monthly in nine months.
However, real estate experts warn that what really affects the real estate dynamics in relation to credit is people's purchasing power.
Leandro Molina, director of Grupo QuintoAndar for Latin America, affirms that with greater supply and the possibility of legally accessing foreign currency, it is feasible to boost both demand and investment in loans. "Likewise, it is imperative that these lines of financing evolve toward more balanced systems , capable of mitigating the risks inherent in persistent inflation and the mismatch between wages and real estate values," the executive clarifies.
Fabián Achával, from the real estate company of the same name, emphasizes that beyond inflation, the key to the consolidation of the mortgage market is the recovery of purchasing power because "the demand for loans depends on disposable income. For the mortgage market to grow, it is essential that wages recover and interest rates fall."
González Rouco also emphasizes this point: " The main factor driving credit growth is salary . Without an increase in income, access to credit remains limited for many families."
Achával adds that "although projected inflation for 2025 is lower than last year's, the problem remains the relationship between payments and salaries . As long as incomes don't keep up, many people will continue to postpone the decision to go into debt."
“ The important thing is to know if you'll be able to pay the installment with your salary ,” insists González Rouco. He explains that, in 2018, loans slowed down due to devaluation, not inflation. “Of course, for someone thinking about making such a decision, low inflation is reassuring, but it's not the most important factor .”
Real estate market analysts agree that the important thing is the rise in wages.Uladzimir Zuyeu - Shutterstock
Molina adds that the big unknown remains real wages. "Even in an environment of greater confidence and access to credit, wage increases are unlikely to keep pace with rising property values , deepening market segmentation." What the executive means is that a significant segment will be left behind without public policies that facilitate their access.
José Rozados, director of Reporte Inmobiliario, adds that, “regardless of the inflation rate, anyone taking out a loan must be aware that their payment and principal will be adjusted in UVA (UVA) , so the initial decision must be made responsibly, knowing this and anticipating that they will be able to afford a future increase, considering their employment situation and income.”
It's important to emphasize that the UVA unit of account exists and makes sense because there's inflation . If there were no instability, "lending would be done directly in pesos, and no index would be necessary. The unit of account is necessary because there are high inflation rates, and even though they've been going on for several months, inflation is still there ," concludes the founder of Reporte Inmobiliario.
"All real estate cycles didn't start with loans, but with the lifting of the currency controls. The fact that people can buy dollars without hesitation is great news ," asserts broker Daniel Bryn. Along the same lines, Molina of Zonaprop explains: "Although the initial devaluation may be pronounced, it gains predictability . With a single exchange rate reference, real estate transactions can be valued more transparently."
www.buysellba.com
Source:
Fin del cepo y aumento de inflación: qué pasará con los créditos hipotecarios
Los anuncios del Gobierno afectarán a un mercado en el que las propiedades se venden en dólares
www.lanacion.com.ar
April 13, 2025
The government's announcements will affect a market where properties are sold in dollars.
By Candela Contreras
Santiago Filipuzzi
The government closed a decisive week for the country's future: to begin with, the Consumer Price Index (CPI) registered a 3.7% increase in March. In February, it had been 2.4%. But analyzing the three months of the year, inflation has accumulated an 8.6% increase, and a year-over-year increase of 55.9%, according to INDEC.
Added to this was the government's announcement : the currency controls are ending . The dollar's value will now fluctuate between $1,000 and $1,400—freely floating within that range, meaning no Central Bank intervention.
How could this new scenario affect mortgage lending? "Starting Monday, they will operate with the official dollar, not the MEP," explains economist Federico González Rouco of the consulting firm Empiria.
Credits will no longer be used in MEP dollars.Santiago Filipuzzi
In any case, while he clarifies that it's very premature to make an analysis, he assures that he doesn't foresee "a chaotic situation" for the exchange rate . "The MEP—which was the dollar used to compare the UVA—was already above $1,300," he explains.
Regarding the impact of the increase in inflation , he also doesn't believe it will affect those in the qualification process, although it will affect the installments on existing lines, which, since they are UVA, are adjusted for inflation . The analysis is that if the exchange rate adjustment impacts inflation and continues to rise in April, UVA installments will become more expensive.
Loans in Argentina are highly dependent on inflation , as the UVA (UVA) is adjusted daily according to the Consumer Price Index (CPI), which allows for a low initial balance. However, in an economy with a history of inflation, the risk of increases over time is high.
In the last six months, monthly payments on these loans have increased by 15.9% . Therefore, rising prices and economic volatility can be factors that complicate access to financing.
Inflation directly impacts mortgage loan paymentsSuperOhMo - Shutterstock
2024 closed with an inflation rate of 117.8% , but what is expected for 2025?
According to projections from the latest LatinFocus report—produced before the announcement of the lifting of the currency controls and the March inflation figures—which compiles estimates from more than 50 banks and consulting firms, inflation is expected to reach 26.6% by the end of the year . With hindsight, this projection is difficult to achieve considering that in just three months it reached 8.6% . In other words, it shouldn't increase more than 1.8% to 2% monthly in nine months.
However, real estate experts warn that what really affects the real estate dynamics in relation to credit is people's purchasing power.
Leandro Molina, director of Grupo QuintoAndar for Latin America, affirms that with greater supply and the possibility of legally accessing foreign currency, it is feasible to boost both demand and investment in loans. "Likewise, it is imperative that these lines of financing evolve toward more balanced systems , capable of mitigating the risks inherent in persistent inflation and the mismatch between wages and real estate values," the executive clarifies.
Fabián Achával, from the real estate company of the same name, emphasizes that beyond inflation, the key to the consolidation of the mortgage market is the recovery of purchasing power because "the demand for loans depends on disposable income. For the mortgage market to grow, it is essential that wages recover and interest rates fall."
González Rouco also emphasizes this point: " The main factor driving credit growth is salary . Without an increase in income, access to credit remains limited for many families."
Achával adds that "although projected inflation for 2025 is lower than last year's, the problem remains the relationship between payments and salaries . As long as incomes don't keep up, many people will continue to postpone the decision to go into debt."
“ The important thing is to know if you'll be able to pay the installment with your salary ,” insists González Rouco. He explains that, in 2018, loans slowed down due to devaluation, not inflation. “Of course, for someone thinking about making such a decision, low inflation is reassuring, but it's not the most important factor .”
Real estate market analysts agree that the important thing is the rise in wages.Uladzimir Zuyeu - Shutterstock
Molina adds that the big unknown remains real wages. "Even in an environment of greater confidence and access to credit, wage increases are unlikely to keep pace with rising property values , deepening market segmentation." What the executive means is that a significant segment will be left behind without public policies that facilitate their access.
José Rozados, director of Reporte Inmobiliario, adds that, “regardless of the inflation rate, anyone taking out a loan must be aware that their payment and principal will be adjusted in UVA (UVA) , so the initial decision must be made responsibly, knowing this and anticipating that they will be able to afford a future increase, considering their employment situation and income.”
It's important to emphasize that the UVA unit of account exists and makes sense because there's inflation . If there were no instability, "lending would be done directly in pesos, and no index would be necessary. The unit of account is necessary because there are high inflation rates, and even though they've been going on for several months, inflation is still there ," concludes the founder of Reporte Inmobiliario.
"All real estate cycles didn't start with loans, but with the lifting of the currency controls. The fact that people can buy dollars without hesitation is great news ," asserts broker Daniel Bryn. Along the same lines, Molina of Zonaprop explains: "Although the initial devaluation may be pronounced, it gains predictability . With a single exchange rate reference, real estate transactions can be valued more transparently."
www.buysellba.com
