Mortgage loans: is it possible to renegotiate the rate in the current economic scenario? | YOUR MONEY

In particular, mortgage rates. which also react to sovereign bond interest rates (with reference to 10 years), already exceed their long-term average (8.29%), as they stand at 9.95% in national currency with information as of November 22nd, according to data from the Superintendency of Banks, Insurance and AFP (SBS) and the BCR.

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Jorge Ojedaprofessor at UPC’s EPE Business School, pointed out that, if the mortgage loan was taken out, say, a year or two ago, it is difficult to reduce that interest rate through a debt renegotiation or purchase, despite the fact that upward pressures are less.

However, he stressed that this figure could perhaps be given to those “good customers”, bearing in mind that the economy could be slower next year, which makes the credit-granting environment more complex and there is competition for the best payers.

It should be noted that the prospects for growth and investment (which affect employment) do not bode well for the following year, which is why analysts have highlighted the slowdown in the local economic scenario. Furthermore, inflation, which reduces people’s purchasing power (a factor that can influence the payment of debts), would still remain outside the BCR target (1%-3%).

“Despite less pressure to raise rates, they are still far from previous levels. Perhaps the benefit can be captured by those clients who have not had late payments or debt renegotiations, who demonstrate ability to pay, or who have jobs or work in companies considered more stable than those of other clients. They may go to a bank and have your loan evaluated. The negotiation with the bank itself would be more complicated”, pointed.

It should be noted that, according to information from the SBS, the average interest rate for mortgages at the beginning of 2021 was 6.38% in national currency. At the end of last year, the average was 6.85%.

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In line with the above Jorge Carrillo Acostaprofessor and finance expert at the Pacífico Business School, he does not expect the debt repurchase figure to be given at a better rate than the current rate, at least until mid-2023.

He points out that, taking into account that normally for a debt purchase to take place at least one year of the mortgage loan must have been paid, it is quite probable that, for now, the rates prior to this period will not be improved.

“Although there would perhaps be a greater tendency to compete for the best customers of the financial system, for the outlook on the economy and on household income in the future, it must be taken into account that mortgages do not leave much leeway for banks or are usually very cheap. If a few years ago I had a rate of, for example, 6%, it’s difficult for him to offer me anything less”Known.

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Ojeda recalled that, in the absence of the possibility of accessing a better rate, other methods can be chosen to lighten the burden of interest in the future, such as amortization of credit.

“If you have a surplus of cash, amortization will always be basic advice for such long-term debt as mortgages. If it is repaid to shorten the term, the interest savings can be substantial,” he indicated.

Take out a mortgage?

Both specialists stressed that, if you are already going to opt for a mortgage, it would be wise to take it now. This considering that it is possible to access a debt purchase with a cheaper rate in the future by virtue of a scenario in which the impact of the increase in the BCR rate dissipates, which could also be reduced the following year.

It should be noted that, according to the FocusEconomics report, Consensus Forecast LatinFocus of November 2022, the central bank’s reference rate would be 5.7% in 2023 (today it is 7.25%).

“It should also be considered that the house prices likely to rise new next year. Added to this is the prospect of rates falling the following year, so there would be room for renegotiation. If the loan has just been taken or you want to take that would be the figure “Carrillo said.

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