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Properties: why with the jumps in the dollar you can be left out of the mortgage loan - La nacion Propiedades
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www.lanacion.com.ar
September 06, 2024
The fluctuations in parallel dollars directly impact property values and the amount that banks grant to mortgage loan applicants
By Candle Contreras
Mortgage loans: the variables that can prevent you from obtaining oneDaenin - Shutterstock
In a context of economic instability , mortgage loans are once again at the center of the debate. Banks in Argentina grant loans in pesos , calculated in UVAs , and properties that are sold in dollars . This combination generates uncertainty, especially with fluctuations in the dollar , which can leave many people without access to their own home and put those who are thinking of applying for them on alert.
Since it was announced that 21 banking entities reactivated mortgage loans , new concerns arose among potential applicants. Banks take between 30 and 40 days from the time the loan is requested until the money is delivered . This point becomes a risk in such a volatile market. “In that time, the values of the properties in pesos , due to the rise of the blue dollar, can increase ,” says Federico González Rouco, an economist specializing in housing. That is to say, the increase in pesos will be in line with the rise of the unofficial dollar - which is the currency in which the properties are quoted -
A clear example is what happened in July , when the blue dollar jumped almost 20% , exceeding $1,500. “At that time, a person’s salary remained stable, but the property they had considered buying increased by 20% in pesos ,” explains González Rouco. This means that an apartment valued at US$100,000, which was equivalent to $130,000,000 (with a dollar at $1,300), went on to cost $156,000,000 with the new value of the dollar. “ That jump in the dollar , whether 10%, 15% or 20%, can be what leaves a person without the possibility of accessing credit ,” analyzes the economist and adds that these variations “put obstacles in the market, that is why stability is important .”
In this context, the options for applicants are reduced and can be two:
1) Find more income to apply
2) Accept that the bank will finance less than expected. This could mean looking for a cheaper property.
Most entities finance up to 75% of the total value of the property in pesos , provided that the initial fee does not exceed 25% of the applicant's income , a point that directly influences the salary, since the ability to cover the amount of this fee can be affected by exchange rate fluctuations, causing many to be unable to qualify for the loan.
The remaining 25% of the property value is paid in dollars as a down payment ; this could be another point to modify: advance dollars so that the remaining amount to be financed - in pesos - is less, but it is worth clarifying that "not everyone has that money under the mattress."
Most banks finance up to 75% of the total value of the property in pesos Daniel Basualdo
This was also one of the reasons why some banks decided to increase the amounts to be lent , such as Nación, Ciudad, Bancor (from Córdoba) and Hipotecario . In the first case, it also enabled loans for second home renovations.
It was the director of Banco Nación, Alejandro Henke, himself, at the Real Estate Expo, who acknowledged that “ properties have increased in price in recent months , so we realized that in the time it took a person to apply for a loan, submit the documentation, have the property appraised and grant the loan, the sales value had increased, so we decided to increase the amounts.”
A key fact to keep in mind is that, four months after the launch of the new lines of loans, the entities have already granted more than 350 loans , while around 14,600 applications have already been approved and are in the process of searching for housing or deeds for their subsequent granting.
This upturn is encouraging for the real estate market , even though it is below the levels of 2017/2018 - when the $500 billion mark was exceeded . “The improvement is widely noticeable, it is being faster than it was in 2016 - when the UVA started - but there is still a long way to go,” says the specialist, adding that the difference with that year is that now “both banks and people already know about the UVA.”
In a scenario where wages , despite having stabilised in the last two months (in June, they again grew above prices, increasing by 6.2% compared to a CPI of 4.6% in the same month), continue to lag behind prices in the year-on-year measurement : 216.3% against 271.5%, and represent a significant limit to access to credit. This difference is fundamental, since the evolution of inflation determines the increase in the UVA quota and the ups and downs of the real salary since December further complicated the situation, with a 25% drop in purchasing power compared to inflation. " The key is for wages to grow more than inflation ," concludes González Rouco.
According to market specialists, the key for mortgage credit to work is for salaries to grow more than inflation.GBJSTOCK - Shutterstock
This case is just one of many examples. Valeria wanted to know the details of a mortgage loan from a bank. The bank's advisor initially informed her that the Annual Nominal Rate was 4%, but then told her it was 5.5%. In addition, when Valeria called to let them know that she already had a property in mind, she was told that the bank had reduced the payment term from 30 to 20 years, which significantly increased the installments she would have to pay.
But this case is not the only one. Other applicants faced inexplicable and changing requirements in their application process. “At one bank they told me that they could not do a credit simulation without a salary credited to the bank,” says one applicant. Another bank required an applicant to be a client for one year before the application was considered. Even a man who is a police officer found that his profession was considered “risky” by the bank’s insurance company.
Experts warn that bank advisers' lack of training and communication is a significant obstacle for applicants .
“Over time, things will settle down. The whole situation is very new,” says Daniel Bryn, a real estate market analyst. “We advise that those who want to access a loan should do so at the bank they have known for a long time, whether or not it has the best rate. Changing banks because they give you a lower rate is complicated, because they don’t welcome you with open arms,” he concludes.
www.buysellba.com
Source:
Propiedades: por qué con los saltos del dólar te podés quedar afuera del crédito hipotecario
Los vaivenes de los dólares paralelos impactan directamente en los valores de las propiedades y el monto que los bancos otorgan a los solicitantes de los préstamos hipotecarios
www.lanacion.com.ar
September 06, 2024
The fluctuations in parallel dollars directly impact property values and the amount that banks grant to mortgage loan applicants
By Candle Contreras
Mortgage loans: the variables that can prevent you from obtaining oneDaenin - Shutterstock
In a context of economic instability , mortgage loans are once again at the center of the debate. Banks in Argentina grant loans in pesos , calculated in UVAs , and properties that are sold in dollars . This combination generates uncertainty, especially with fluctuations in the dollar , which can leave many people without access to their own home and put those who are thinking of applying for them on alert.
Since it was announced that 21 banking entities reactivated mortgage loans , new concerns arose among potential applicants. Banks take between 30 and 40 days from the time the loan is requested until the money is delivered . This point becomes a risk in such a volatile market. “In that time, the values of the properties in pesos , due to the rise of the blue dollar, can increase ,” says Federico González Rouco, an economist specializing in housing. That is to say, the increase in pesos will be in line with the rise of the unofficial dollar - which is the currency in which the properties are quoted -
A clear example is what happened in July , when the blue dollar jumped almost 20% , exceeding $1,500. “At that time, a person’s salary remained stable, but the property they had considered buying increased by 20% in pesos ,” explains González Rouco. This means that an apartment valued at US$100,000, which was equivalent to $130,000,000 (with a dollar at $1,300), went on to cost $156,000,000 with the new value of the dollar. “ That jump in the dollar , whether 10%, 15% or 20%, can be what leaves a person without the possibility of accessing credit ,” analyzes the economist and adds that these variations “put obstacles in the market, that is why stability is important .”
In this context, the options for applicants are reduced and can be two:
1) Find more income to apply
2) Accept that the bank will finance less than expected. This could mean looking for a cheaper property.
Most entities finance up to 75% of the total value of the property in pesos , provided that the initial fee does not exceed 25% of the applicant's income , a point that directly influences the salary, since the ability to cover the amount of this fee can be affected by exchange rate fluctuations, causing many to be unable to qualify for the loan.
The remaining 25% of the property value is paid in dollars as a down payment ; this could be another point to modify: advance dollars so that the remaining amount to be financed - in pesos - is less, but it is worth clarifying that "not everyone has that money under the mattress."
Most banks finance up to 75% of the total value of the property in pesos Daniel Basualdo
This was also one of the reasons why some banks decided to increase the amounts to be lent , such as Nación, Ciudad, Bancor (from Córdoba) and Hipotecario . In the first case, it also enabled loans for second home renovations.
It was the director of Banco Nación, Alejandro Henke, himself, at the Real Estate Expo, who acknowledged that “ properties have increased in price in recent months , so we realized that in the time it took a person to apply for a loan, submit the documentation, have the property appraised and grant the loan, the sales value had increased, so we decided to increase the amounts.”
A key fact to keep in mind is that, four months after the launch of the new lines of loans, the entities have already granted more than 350 loans , while around 14,600 applications have already been approved and are in the process of searching for housing or deeds for their subsequent granting.
The best month of 2024
August was the month with the highest number of mortgage loans granted in 2024. According to data provided by specialist González Rouco, who this year published his book entitled El sueño de la casa propia , during the eighth month of the year $67 billion in loans were granted to individuals , three times as much as in July with $21 billion , some 190 loans - taking as the average value per square meter of a two-room apartment in the city of Buenos Aires, about US$1,825/m² according to the latest data collected by Reporte Inmobiliario-. “It is the highest level since 2018-2019 and far exceeds those granted between December 2023 and June 2024 , which was a total of $25 billion - a total of 20 loans per month - when there were no UVA loans offered by so many banks,” shares González Rouco.This upturn is encouraging for the real estate market , even though it is below the levels of 2017/2018 - when the $500 billion mark was exceeded . “The improvement is widely noticeable, it is being faster than it was in 2016 - when the UVA started - but there is still a long way to go,” says the specialist, adding that the difference with that year is that now “both banks and people already know about the UVA.”
In a scenario where wages , despite having stabilised in the last two months (in June, they again grew above prices, increasing by 6.2% compared to a CPI of 4.6% in the same month), continue to lag behind prices in the year-on-year measurement : 216.3% against 271.5%, and represent a significant limit to access to credit. This difference is fundamental, since the evolution of inflation determines the increase in the UVA quota and the ups and downs of the real salary since December further complicated the situation, with a 25% drop in purchasing power compared to inflation. " The key is for wages to grow more than inflation ," concludes González Rouco.
According to market specialists, the key for mortgage credit to work is for salaries to grow more than inflation.GBJSTOCK - Shutterstock
An extra obstacle for mortgage loan applicants
Banks, which have already received more than 50,000 queries since the first announcement of loans, have a barrier that is causing applicants to give up on accessing a loan from a certain entity: the lack of training and communication of bank advisors .This case is just one of many examples. Valeria wanted to know the details of a mortgage loan from a bank. The bank's advisor initially informed her that the Annual Nominal Rate was 4%, but then told her it was 5.5%. In addition, when Valeria called to let them know that she already had a property in mind, she was told that the bank had reduced the payment term from 30 to 20 years, which significantly increased the installments she would have to pay.
But this case is not the only one. Other applicants faced inexplicable and changing requirements in their application process. “At one bank they told me that they could not do a credit simulation without a salary credited to the bank,” says one applicant. Another bank required an applicant to be a client for one year before the application was considered. Even a man who is a police officer found that his profession was considered “risky” by the bank’s insurance company.
Experts warn that bank advisers' lack of training and communication is a significant obstacle for applicants .
“Over time, things will settle down. The whole situation is very new,” says Daniel Bryn, a real estate market analyst. “We advise that those who want to access a loan should do so at the bank they have known for a long time, whether or not it has the best rate. Changing banks because they give you a lower rate is complicated, because they don’t welcome you with open arms,” he concludes.
www.buysellba.com
