SANTO DOMINGO – Leaders in the real estate and construction industries are concerned about the Central Bank's increases to the Monetary Policy Rate (MPR), as this could lead to higher mortgage rates and affect vulnerable sectors, complicating their ability to purchase homes.
The former president of the Dominican Association of Housing Builders and Developers (ACOPROVI), Fermín Acosta, hopes that other palliative measures can be taken because the rise in mortgage rates "greatly harms the most needy people who make a great sacrifice to acquire their home.".
Although he acknowledges that these are measures to control inflation, the president of the Association of Real Estate Agents and Companies (AEI), Alberto Bogaert, believes that "interest rates on all types of loans—mortgages, vehicle loans, commercial loans, personal loans—will rise a few points over time," although he reasons that these are economic movements that seek to control the economy by collecting circulating currency.
Leading economists in the country predict that within three months loan rates could be between 15 and 17%.
“We have certainly been observing increases in the interest rate and we also expect them to continue rising due to the economic conditions and the measures taken by the monetary board authorities, and also because we see that internationally interest rates have been trending upwards,” Acosta states.
He adds that this is a matter of concern because it makes it more difficult for homebuyers to realize their dreams, and he hopes that the country can take other measures to alleviate the economic situation besides raising interest rates, especially on mortgages.
Bogaert asserts that the recent increase in the monetary policy rate seeks to control inflation, but expresses optimism that investments in properties will not be affected because "with the different crises seen before we have noticed that real estate investments rarely stop.".
“The sales boom is difficult to stop since the quality offering and the time to complete payments for projects under construction will always be attractive factors for investment,” says the president of the AEI.
He adds that the adjustments in rates are not an issue exclusive to the Dominican Republic and that the same phenomenon is occurring in the United States; he expresses his hope that "in a few months we can return to normal and that our real estate sector, which is a well-prepared sector, will continue to offer solutions to its investors.".
Two economists speak
Two of the leading Dominican economists believe that the increases in the Monetary Policy Rate (MPR) will soon have repercussions for the country's commercial banks.
Antonio Ciriaco Cruz stated that for the next three months the average active interest rate (on loans) could be between 15% and 17%.
He indicated that this latest increase in the monetary policy rate is deliberately causing an "unnecessary" recession in the economy, considering that the current inflation of more than 70% is not of monetary origin, but rather is an inflation subject to the costs of fuels and energy, a situation related to the war between Russia and Ukraine.
The newly elected dean of the Faculty of Economic and Social Sciences of the Autonomous University of Santo Domingo (UASD) pointed out that the Central Bank increasing the Monetary Policy Rate (MPR) can affect core inflation, which is that which depends on a purely monetary component, but said that this inflation depends on supply, the supply chain and the rise in commodity prices.
Ciriaco Cruz pointed out that if the Central Bank continues with this policy, it will cause a reduction in economic activity and a slowdown in job creation, which will imply lower economic growth, which is already projected at 4.2%.
For his part, Miguel Collado Di Franco, from the Regional Center for Sustainable Economic Studies (CREES), pointed out that, in addition to the impact that the increase in the Monetary Policy Rate (MPR) to 7.25% will have on passive and active interest rates, it will affect the national public debt due to the increases in interest rates at the international level, especially those of the Federal Reserve, as well as due to the increase in the MP made by the Central Bank.
