9 out of 10 mortgage loans are paid on time

Despite the contraction of the Peruvian economy during 2023 – which took it to its worst record in 31 years, not counting the pandemic – in a context where the purchasing power of households has been dented by inflation and deterioration in employment quality, Peruvians have maintained interest in purchasing a home, and even in making mortgage loan payments on time.

According to Experian, the mortgage market is made up of 300,000 people and more than S/66,000 million have been placed at the end of the year. Regarding the level prepandemicthere is an increase of approximately S/10,000 million in the area.

Even with the health catastrophe and the subsequent inflation, interest in fulfilling the dream of owning one’s own home has not been lost, whether to reside or make the most of it by renting it, explained Elio Peralta, Senior Business Consultant at Experianto The Republic.

Peralta points out that the commitment to make payments is a good sign, given that of every 100 mortgage loans, 97 are paid on time.

“Year after year, the constant growth of mortgage credit has been maintained despite difficulties such as the pandemic and inflation (…) Peruvians prioritize the payment of a mortgage loan over others. It is a sector (real estate) that remains resilient despite adversity,” says Peralta.

In his opinion, Peruvians have “a positive payment culture” which translates into the stability of sales and gives confidence to the financial system because it makes it easier for more and more citizens to purchase this product.

Will rates go down?

The growth of credit placements occurs when the Annual Effective Cost Rate (TCEA) —which includes all the costs to be assumed, according to the SBS—ranges between 14.13% and 37.42%.

It is expected that the Central Reserve Bank (BCRP) will continue reducing the reference interest rate that sets the tone for financial operations, but Peralta alleges that they do not expect a contraction in the mortgage rate in the short term given that costs for companies have risen. He even assures that not even the contraction of the construction sector will affect the sector.

Despite this, he insists that the enthusiasm for buying a property will not be lost.. Here, diversification of the portfolio through municipal savings banks will be vital.

Although 97% of mortgage loans are concentrated in banks, he considers that savings banks, being closer to medium and small businessmenthey can increase their participation further: currently they only capture S/1 million 570,000 and their default ratio is 4.15%.

At the regional level, after Lima —with S/46,000 million of the total— La Libertad, Cajamarca, Junín and Huánuco “are promising for the mortgage market due to their low volume of delinquencies (3%)” and because “They connect more with regional businesspeople.”

“It is important to promote the financial inclusion and diversification of access to credit reaching more regions,” he alleged, but not before revealing that the majority of clients belong to the age group of 25 to 50 years and are “in productive and establishing stages of their lives.”