The market for UVA mortgages is experiencing a resurgence, with several banks announcing new lines of credit for home purchase and construction. City Bank, following in the footsteps of Banco Hipotecario, has joined the movement by offering a maximum amount of 250 million pesos, terms up to 20 years, and an annual nominal rate of 5.5%, which can drop to 3.5% for properties in Buenos Aires microcenter. The goal is to encourage investment and transformation in areas affected by the pandemic.
In response to this trend, private banks are expected to join the ranks later in the year. Public or semi-public banks have been leading the way, recognizing the need for flexibility and support for borrowers during these challenging times.
Banco Ciudad’s initial proposal includes adjusting capital owed with the value of the Purchasing Value Unit (UVA) to counter inflation. This measure shows their commitment to long-term stability and sustainability in the mortgage market. On the other hand, Banco Hipotecario offers a credit line for a maximum of 250 million pesos over 30 years at an annual nominal rate of 8.5%. However, borrowers with salary accounts at their bank receive a reduced rate for the first 12 months. Both banks prioritize borrowers with salary accounts at their respective institutions and finance up to 80% of transaction value.
To build confidence in debtors and protect them from inflation risks, National Bank plans to offer CER mortgages with a safeguard mechanism that will kick in if fee-income ratio exceeds a pre-set limit during loan term. Despite challenges, UVA mortgage delinquencies remain less than 1% of loans granted between 2016 and mid-2018, indicating relative stability in the market. Overall, this resurgence in UVA mortgages reflects optimism about economic recovery and growth opportunities ahead.
