The cost of mortgage credit, which until now has remained stable, will inevitably not be affected by higher interest rates during the year due to global and local financial conditions, since long-term funding rates for banks have become highly reputed.

During the last decade, mortgage credit has been the most competitive banking product, where the competition to achieve greater market share has focused on the interest rates that the institutions offer in the product offering.

According to the Mortgage Credit Cost Indicator published by the Bank of Mexico (Banxico), from 2018 to January 2022, average interest rates have fluctuated between 10.8% and 9.9%. At the end of January of the current year, the average cost of credit was 10.13%, a level similar to that of December 2021.

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Each institution has a diversified range of products, so options with lower rate levels will be found, compared to the average, if certain conditions are met in each one.

For example, on March 15 the 10-year M bond stood at 8.25%, but only in December 2021 it closed at 7.59%, which implies that it has not stopped having upward corrections.

Likewise, at the end of 2020, the M10 Bond stood at levels of 5.2%, which shows that in the last 27 months the cost of funding for banks has increased by around 300 basis points and has not really been reflected ( until the end of January 2022) in upward corrections in the cost of mortgage credit.

Due to the trajectory of interest rates on mortgage loans offered by banks in the last 22 years and due to the competition between institutions for said product, strong upticks will not be observed, but it will be inevitable to see corrections in the remainder of the year.

Something that seems very important to us is to insist that for all the people or families that already have a valid credit, they must be certain that their monthly payment will not be increased if their contract was at a fixed rate and fixed payments, which predominates in the market.

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For people who requested a loan and were approved, at the time their loan is accepted, they are given a letter that, depending on the bank, will allow them to exercise their credit in a period of 60 to 90 days (search for the property), without the conditions of the credit are affected if it is that in that period the costs of the same will rebound.

Depending on what happens in the future with long-term interest rates in the global markets and is reflected in the Mexican M10 Bonds, the magnitude of the adjustment in the cost of mortgage credit may be defined in the following months of 2022.

The decisions to adjust the interest rates in this product, to a large extent, are not due to internal conditions, but rather to the global financial context that in some way determined the health crisis.

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Original note