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Reduction in interest rates for home purchases
Reduction in interest rates for home purchases
The recent reduction in mortgage interest rates by banks has created a more favorable environment for home purchases in Colombia. This measure will also allow Colombians inside and outside the country to access financing at lower interest rates. According to Camacol, this initiative represents an excellent opportunity to revive the real estate market. So far, six entities have joined in, bringing rates to an average of 10% effective annual interest.
Which banks have reduced interest rates?
The first institution to provide this relief was Bancolombia, followed by Fondo Nacional del Ahorro, Davivienda, Grupo Aval, BBVA, and recently Confiar. These institutions have lowered interest rates on mortgage loans, allowing buyers to review who offers the lowest rate on the market and begin the process with the institution that has the most attractive offer.
Which banks have the lowest rates on the market?
Bancolombia has announced a reduction in interest rates starting July 20, 2024, for its home financing and residential leasing products. As such, the rates for these types of loans in projects financed by the entity will be 10% effective annual rate.
Loans for new homes in projects not financed by Bancolombia, as well as for the purchase and remodeling of used homes, individual home construction, and the purchase of housing portfolios, will also see a reduction in their rates, which will be 11% effective annually.
The National Savings Fund shared that it currently has an effective annual rate of 9.3%. According to the entity, this rate is specifically for Generación FNA, a line of credit intended for young people between the ages of 18 and 28.
The president of the entity indicated that in addition to reducing the interest rate by 70 basis points, Generación FNA beneficiaries can finance up to 90% of the value of the property they wish to purchase. Additionally, they will not be charged for title searches or appraisals.
Similarly, for loans in pesos intended for people with incomes of zero to two minimum monthly wages, the FNA highlighted that it offers an interest rate of 10% E.A.
Davivienda announced that, starting July 16, it will reduce its rates for home purchases, setting them at 10% effective annual rate for residential leasing for projects financed by the entity, and 11% effective annual rate for other new homes. They also indicated that they will continue to review economic conditions periodically to evaluate future rate adjustments.
Grupo Aval announced that interest rates for home purchases at Aval banks will range from 9.5% APR for residential leases and 10% APR for mortgage loans, promoting new loans and portfolio purchases with these rates.
In turn, the president of Grupo Aval indicated that, “In 2024, we are committed to disbursing around $12 trillion in loans to SMEs, women-led companies, export companies, leasing to finance the acquisition of productive assets, for small agricultural producers with agro-factoring and the Finagro integration scheme. Grupo Aval's commitment to economic recovery goes beyond rates.”
BBVA in Colombia announced that for those interested in purchasing non-VIS housing through residential leasing, the bank is reducing its effective annual rate from 10.50% if they purchase housing in financed or non-financed projects or used properties. Meanwhile, for mortgage loans, the rate is reduced from 11% APR for the purchase of homes in financed projects and from 11.50% APR for non-financed and used projects.
These benefits include no cost for appraisal and title search, as long as customers purchase their VIS property through a mortgage loan and their non-VIS property through a residential lease.
This offer will apply to new loan applications starting on Thursday, July 11, and whose disbursement is made before December 31, 2024.
The Confiar Financial Cooperative will lower its mortgage interest rates starting July 15, 2024. Households with incomes of up to two minimum wages who wish to purchase a social housing unit (VIS) will be able to access an effective annual interest rate of 10%. On the other hand, the effective annual interest rate on mortgage loans for households with incomes above two minimum monthly wages who are purchasing a VIS or non-VIS home has also been lowered from 17% to 11%.
Can Colombians living abroad buy property?
Bancolombia has assured that this reduction will also be of great use to Colombians living abroad in any of the 20 countries where the entity has a presence, such as the United States, Canada, Spain, the United Kingdom, and Australia, among others.
On the other hand, according to figures from the Banco de la República, in the last year, the country received a record $10.528 billion in remittances, but it is estimated that most of these resources are used for current household expenses, while a very small proportion is invested in durable goods.
In turn, Camacol is in the process of formulating a strategy to provide Colombians living abroad with greater facilities and incentives. The objective is to channel their savings and remittance resources into investment in housing.
The recent reduction in mortgage interest rates in Colombia offers an opportunity for buyers, giving them the advantage of comparing and choosing the best offer available. This is an ideal time to consider buying a home and take advantage of the favorable conditions currently present in the market. We recommend doing so with trusted entities. At Alberto Álvarez Inmobiliaria, we accompany you in the purchase of your apartment for sale in Medellín.
Written by: Valeria Ospina – Marketing Analyst
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