Representatives of the banks expressed their satisfaction with the measure, whose annual interest rate is up to 10%.
SANTO DOMINGO. -The 35 billion pesos that the Monetary Board (JM) authorized to be released to the Central Bank of the Dominican Republic (BCRD) offer greater guarantees that these are new loans, because they will have stricter supervision mechanisms.
The proposal was made by economist Francisco Taveras, professor at the Autonomous University of Santo Domingo (UASD), who emphasizes that the measure will help alleviate the country's housing deficit, which is a development and public policy priority.
The governor of the Central Bank of the Dominican Republic (BCRD), Héctor Valdez Albizu, met yesterday with the presidents of the multiple banks to announce that the Monetary Board (JM) authorized the release of some RD$35 billion, equivalent to 1.75% of the legal reserve requirement, so that financial intermediation entities can channel these resources to new loans for home acquisition, interim loans and home construction, at an annual interest rate of up to 10%.
“The new aspect is that these released funds will be subject to stricter oversight mechanisms to ensure they are for new loans and first-time homeowners. This prevents real estate investors from buying homes for individual rental rather than for personal use,” Taveras explained to El Inmobiliario.
He considered the measure necessary, since if applied under the indicated control criteria, it goes in the direction of reducing the country's housing deficit, which is a development and public policy priority
“Owning a home is an important asset for the future; it is a guarantee for a better life, since it is a family aspiration that is becoming more difficult every day due to construction costs and the prices of spaces in the city,” he said.
He said that this is good news for the sector and for first-time buyers, because 40% of the total funds to be released from the Legal Reserve will be allocated to low-cost housing, and 60% will be allocated to homes that are not in the low-cost range but are less than RD$15 million pesos.
Francisco Taveras. (EXTERNAL SOURCE).
The measure
During the meeting with banking representatives, Valdez Albizu indicated that “40% of the authorized amount, equivalent to approximately RD$14 billion, will be allocated to loans for the purchase of new low-cost housing, meaning homes valued at no more than RD$5,025,380.75 according to current regulations. Families receiving these loans will benefit from the program's terms for up to seven years.”
Valdez Albizu also explained that “the remaining 60%, approximately RD$21 billion, will be channeled toward interim loans and housing construction loans, with terms of up to two years from the date of disbursement by the financial institution to the final beneficiary, as well as for the purchase of homes with an appraised value of up to RD$15 million, with terms of up to seven years from the date of disbursement.”
The governor highlighted that “this measure is in addition to other actions taken by the Central Bank to increase bank liquidity, among which the redemption at maturity of Central Bank bills and notes that will amount to RD$140 billion during the last quarter of 2024 stands out, which, added to the new measure of release of legal reserves, would yield a total amount of liquidity of about RD$175 billion available to financial entities before the end of the year.”
Furthermore, Valdez Albizu noted that “the Central Bank had extended repurchase agreement facilities for multiple banks to terms of up to 28 days, and provisions to cover interbank transactions using securities issued by the Central Bank and the Ministry of Finance as collateral were eliminated. Likewise, a one-year extension had been approved for the maturity date of approximately RD$68 billion in rapid liquidity facilities (FLR), in order to neutralize the contractionary effect of the return of these payments to the Central Bank.
He emphasized that with this extension, financial intermediation entities will have additional resources available, in addition to the RD$175 billion from Central Bank securities redemptions and the new release of reserve requirements.”
Easing Program
These measures are part of a monetary easing program by the Central Bank, in an environment where inflation has remained around the lower limit of the target range of 4% ± 1%. These provisions, along with the 75 basis point reductions in the monetary policy rate accumulated since August of this year, should help accelerate the transmission of monetary policy and lower interest rates on loans to productive sectors and households, contributing to sustained credit growth to productive sectors and households, and fostering favorable conditions to maintain the dynamism of consumption, investment, and aggregate demand.
The presidents of the multiple banks and the executive president of the Association of Multiple Banks of the Dominican Republic (ABA), Rosanna Ruiz, expressed their satisfaction with the measure taken by the Monetary Board, emphasizing that it represents a significant step forward for the disbursement of loans to clients seeking to purchase low-cost housing.
During the meeting, the following executives were present: Samuel Pereyra, administrator of Banreservas; Manuel E. Jiménez, CEO of Grupo Popular; Christopher Paniagua, CEO of Banco Popular; Luis Molina Achécar, Chairman of the Board of Banco BHD; Steven Puig, CEO of Banco BHD; Fausto Pimentel, CEO of Banco Santa Cruz; Fabio Restrepo, CCO of Citibank; Gonzalo Gil, Senior VP & Country Head of Scotiabank; Juan Carlos Rodríguez Copello, CEO of BDI; Roberto Despradel, Chairman of the Board of Banesco; and Víctor Virgilio Mendez Saba, President of Banco Vimenca, among others.
Representing the Central Bank of the Dominican Republic (BCRD), along with the Governor, were Vice Governor Clarissa de la Rocha de Torres; General Manager Ervin Novas Bello; Joel Tejada Comprés, Deputy Manager of Monetary, Exchange Rate, and Financial Policies; and Máximo Rodríguez, Deputy Manager of Regulation and Financial Stability. Joel González, Deputy Manager of Monetary Programming and Economic Studies; and Carlos Delgado, Director of the Department of Regulation and Financial Stability.
