Since August 2021, the Central Reserve Bank of Peru (BCRP) has begun to raise its reference rate as part of its monetary policy to deal with inflation. However, this increase has begun to affect mortgage interest rates in recent months, which have exceeded 8% after being over 6% in 2021 (see infographic).
Thus, the average rate of mortgage loans is 8.24%, which means that the monthly installments to be paid are also higher.
To this is also added that the price per square meter of housing in Lima is on the rise and averages S / 6,800.
This increase is explained by higher construction costs, as a result of the increase in the price of raw materials and the exchange rate, according to Paola Galli, vice president of Real Estate Investments at Credicorp Capital.
placements slow down
Although the sale of homes is stable, it has been slowing down in recent months, since in May only 1,022 properties were sold after exceeding 1,600 in March (see infographic).
“The decrease in sales levels has been observed in all markets: in Lima Moderna, Lima Top, Lima Este, Lima Centro. We see that it is a general behavior of the housing market due to this increase in rates”, pointed out the executive of Credicorp Capital.
According to the expert, this higher financial cost has caused those interested in purchasing a home to postpone their purchase in the hope that interest rates may fall in the coming months.
“An increase of one point in the rate (of the mortgage credit), in a house with an average ticket of S/450,000, means an increase in its monthly installment of between S/300 and S/350 approximately”, Paola Galli pointed out.
Thus, since the monthly installments have increased as a result of a higher interest rate, the households that were going to acquire a home must now have a higher income to face this increase.
“A person needs to have S/1,000 more income to be able to face that increase in the monthly fee rate of between S/300 and S/350,” he said.
Regarding the rate trend, Galli foresees that they will continue to rise throughout 2022; however, the financial cost of mortgage loans is expected to stabilize only in mid-2023, in line with the return of inflation to the target range.
Finally, it is estimated that with the release of the CTS and the withdrawal of AFP funds, home sales will improve in the coming months.
Office occupancy would improve
According to Credicorp Capital’s projection, prime office occupancies are expected to improve in the second quarter of 2022 thanks to the pace of vaccination and because companies have been encouraging a safe return to offices.
“There has been a certain recovery in the office market. We observe it by the number of requests we receive in the area for the rental of the offices that we have vacancies within the portfolio. This is a market in which the perspectives vary according to the political situation”, Galli pointed out.
amounts. In May of this year, S/61,134 million were disbursed.
Placements. Annual home sales in Lima in the last 12 months, as of May this year, were 15,591, according to ASEI data.