In the first quarter of 2023, the mortgage interest rate closed at an average of 12.76% and fluctuated between 10.41% and 13.20%, finally settling at 11.09% on the 18th of this month, according to official figures from the Central Bank.
SANTO DOMINGO.-The decline in the construction sector is contributing to the decrease in mortgage rates at the country's banks, which currently show rates as low as 11.09%, according to figures provided by the Central Bank of the Dominican Republic.
A report published today by Listín Diario states that despite the rise in interest rates driven by monetary authorities in the local market, given the available resources to control inflation, the market itself has adjusted the price of money and today mortgage loans are being closed at 11.09%, slightly cheaper than in the same quarter of this year.
It states that in the January-March quarter of this year 2023 the mortgage interest rate closed at an average of 12.76% and remained with fluctuations of 10.41% and 13.20% until ending business at 11.09% on the 18th of this month, according to official figures from the Central Bank.
"It is inferred that this relationship responds to the decline reflected in the private construction sector, which fell by -11.5%, and in commerce, which also fell by -0.7%, and therefore to a loss of dynamism in the mortgage market," states the information under the signature of journalist Cándida Acosta.
However, buyers say that going forward, this situation will also adjust the prices of homes that already had extraordinary, almost overvalued values and with quotations in dollars.
In January of this year, buyers of houses and buildings with mortgage loans in the Dominican financial system closed deals with a rate of 13.06%, in February 13.15% and in March 12.23%.
Already in the first 18 days of April the weighted average rate closed at 12.43%, although on the 18th, the day of the last data record it closed at 11.09%.
However, that sector, which in 2021 closed deals at an active rate (loans) of 9.15% and registered deals at 6.21% for the preferential rate, began its upward trend from 2022 until closing at 11.45%, a behavior that varied until reaching 12.23% in December, the same as in the previous quarter.
Meanwhile, consumer activities and personal loans closed at an average of 19.84% in the first quarter of this year, registering an increase of two points, from the average of 17.84% that had closed in 2022.
In April, the active interest rate on consumer and personal loans rose another point, closing at an average of 20.46% and at 20.58% on April 18th.
Considering the trend since 2021, the increase is four percentage points, rising from 15.45% to 20.46% in the last three years. However, the closing rate for the quarter was 19.84%, and the 20% trend is expected to continue, as some transactions were conducted at a rate of 21.14%.
Commercial activity also saw a four-point increase since 2022, but the percentage showed a nearly imperceptible decrease in the quarter and on April 18th. The average passive interest rate for commercial loans was 13.90% in the first quarter of this year and 14.72% in the first 18 days of April. On the 18th, business closed at a rate of 14.32%.
Preferential
In the market, since 2019, data on the behavior of preferential interest rates has been stratified by sector, that is, the interest charged to preferential debtors, those who have a positive compliance behavior and ability to pay.
The weighted average of preferential rates was 12.13% in the 2023 quarter and 12.77% last April, and there were negotiations with rates as low as 10.80%.
Preferential rates for trade closed at 12.83%, for consumer and personal loans at 13.63% and for mortgages at 11.20% in the first 18 days of April.
On the 18th, business closed at 10.92%, 10.56% and 988%, respectively.
Interest rates reflect the price of money. Active interest rates apply to loans, while passive interest rates are paid on investments, savings, and checking accounts.
The Monetary Policy Rate (MPR) in the Dominican Republic has remained at 8.50% since October 2022, when it was at 8.25%.
The monetary policy measure has focused on controlling inflation.
Source: Listín Diario.
