Mexicans are taking advantage of record low mortgage rates and refinancing their homes, leading to a major shift in the country’s housing market. CCTV America’s Franc Contreras reported this story from Mexico City.
Low interest rates in Mexico prompt home purchasing and refinancing boomMexicans are taking advantage of record low mortgage rates and refinancing their homes, leading to a major shift in the country’s housing market. CCTV America’s Franc Contreras reported this story from Mexico City.
Denisse and Octavio Villegas consider themselves lucky. After they got married, they decided to buy a home in late 2013, just as Mexico began recovering from a housing crisis that nearly collapsed the market and caused the nation’s three largest homebuilders to stop construction. When the Villegas began looking, interest rates had fallen and refinancing became widely available.
“With our [low] monthly payments, we were able to afford the wedding that we always wanted. Besides that, we went on vacation, bought furniture and can even go to the movies and a restaurant once in a while,” said Denisse Villegas.
Banking experts say mortgage interest rates in Mexico are now at a 25-year low. Mexico’s leading banks, Banamex, Bancomer, Bank of Nova Scotia, and HSBC have all dropped their lending rates on home loans.
The Central Bank says average interest rates for all types and maturities of home loans dropped to a low of 10.8 percent in July. A year earlier, those same rates were at 12.1 percent.
Policies from previous administrations that made millions of homes in the outskirts of cities more affordable had led to the near collapse of Mexico’s housing industry.
The housing crisis was a major problem for the economy when Mexico’s President Enrique Pena Nieto took office in December 2012. This year economists say things are slowly starting to recover.
But while interest rates are more affordable, some say that the country’s construction industry has virtually stalled.
“Public investment in infrastructure, highways and everything has been negative at least for a couple of years and is still going downwards. So the construction sector has been one of the hardest hit sectors in the economy over the last year,” said economist Jonathan Heath.
On the outskirts of the capital and several other cities, abandoned homes still abound.