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The country’s two largest banks, Bancolombia and Davivienda have a client base with large housing portfolios and will reduce interest ratesin a “war” that favors customers and in the process will help reactivate the industry, one of the sectors that can contribute to the reactivation the fastest.
(farther: Promoting non-VIS housing is key to boosting economic recovery).
Housing plays key role in economic recoverybecause it is the second activity with the greatest impact on GDP, according to Asobancaria, with a multiplier of 2.9, that is, every peso invested generates 2.9 pesos in the economy.
This sector is linked to 56% of the production sector and creates 20% of the jobs in the labor market.
In Asobancaria’s latest housing report, Need to stimulate both social housing (VIS) and non-VIS sectorsbecause every peso invested in the sector generates 9.6 pesos in the economy.
(Lea: Do you want to buy social housing? The first Advanced VIS project is launched in Bogota).
Asobancaria said one measure to promote non-VIS housing is to review the regulatory parameters that determine the percentage of income that a household can allocate to buy a home, known as LTI (loan to income), which is currently set at 30%.
The union said that LTI should be made more flexible by increasing the LTI of the non-VIS segment to 40% to make the parameter equal to the existing one of the VIS segment.
One of the tasks is to deepen access to housing for the informal population and those with limited access to credit.
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This will bring an additional 1.4 million households into the market, giving them an opportunity to become potential buyers.
Housing investment totaled $109.3 billion, accounting for 18.8% of the total.
In order to change the numbers and stimulate the sector, Bancolombia and Davivienda have both proposed a 10% housing loan portfolio, with which they hope to increase their portfolios, which, despite the deterioration, will maintain an average quality of less than 3.3% (see chart).
(Via: Housing subsidies available in Colombia in 2024: requirements).
Yesterday, Davivienda reported that interest rates for buying new homes will start from 10%.
“We believe that Colombia’s prosperity is built together, which is why we have teamed up with construction companies, real estate companies and the entire chain of the housing construction industry to jointly announce to the country that we will offer interest rates starting from 10%, which means a restart boost and will benefit thousands of families.said Javier Suárez, president of Davivienda.
Rate hikes transmitted to housing credit
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In 2023, the entity disbursed 48,038 loans worth $5.7 trillion, while as of May this year, it had disbursed 18,098 loans worth $2.1 trillion.
The rate applies to VIS customers who purchase new homes and meet the entry requirements for government programs such as Mi Casa Ya. A week ago, the Bank of Colombia announced that it would reduce the “Significantly”, 10% EA.
(farther: Bogota, Medellín, Cali and Barranquilla are the cities with the strongest housing activity).
Los Angeles New home loan For credits for non-bank financed projects, acquisition and renovation, individual housing construction and housing portfolio purchases, the EA will be 11%.
VIS homebuyers will be able to apply for the Mi Casa Ya subsidy and the new rates simultaneously, so if they meet the requirements to receive the subsidy, the benefit will be deducted from the rate applied. The program will also apply to Colombians living abroad in one of the 20 countries served by Colombian banks, such as the United States, Canada, Spain, the United Kingdom and Australia.
Holman Rodriguez Martinez
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