The decline in international rates is already reflected in a reduction of between 125 and 150 basis points compared to the previous year, and "This is positive because it anticipates that mortgage rates may have a downward trajectory," says economist Raúl Ovalle.
SANTO DOMINGO. – The gap between the Central Bank's monetary policy rate and the mortgage rates offered by banks has been one of the main concerns of the Dominican real estate sector during the last two years.
However, economist Raúl Ovalle said in his interview with La Ventana, of El Inmobiliario, that the debate is usually presented in an incomplete way.
The local rate, he explains, cannot be analyzed without considering the international financial environment and, especially, the monetary policy of the United States. “The main determinant is the international interest rate,” Ovalle points out.
He says that as long as the Federal Reserve maintains relatively high rates, capital will seek returns, putting pressure on the exchange rate in open economies like the Dominican Republic, and in that context, the domestic interest rate fulfills a defensive function: to avoid abrupt capital outflows and preserve exchange rate stability.
“Talking about interest rates is talking about one side of the coin, the other side of which is the exchange rate,” he summarizes.
From this perspective, he understands that the perception that local rates are “wrong” or artificially high is losing ground. In fact, Ovalle emphasizes that, when analyzing the real rate, adjusted for inflation, the current level does not differ significantly from the average of the last decade.
This result, in his opinion, is key for the real estate sector, because it suggests that the recent slowdown in demand cannot be attributed solely to the cost of financing.
The outlook for 2026, however, is more favorable. International interest rates have begun to decline from 2024 levels, and this trend is already reflected in a reduction of between 125 and 150 basis points compared to the previous year.
“This is positive for the economy and for the construction sector, because it anticipates that mortgage rates may have a downward trajectory over time,” Ovalle points out.
The economist warns, however, that this trend depends on the Federal Reserve maintaining its current course, since an unexpected change, such as a prolonged pause in rate cuts, would have immediate effects on local monetary policy.
Although it is not the baseline scenario for 2026, Ovalle considers it a risk that should be closely monitored.
Beyond interest rates, the diagnosis is clear: the real estate sector faces additional structural challenges. The recovery will be faster, he argues, if other factors influencing demand and the sector's dynamics are addressed, particularly public investment and the execution of infrastructure projects. Interest rates will help, but they are not a solution on their own.
