Will USD Mortgage Loans Ever Resurface in Mexico?

by Enrique "Henry" Saldana (May 2013)

Will USD mortgage loans ever resurface In Mexico? Yes, but not coming from a bank or any institutional lender as far as we are concerned. And the reasons for this are the following:

USD mortgage loans in Mexico, which normally had interest rates in the range of 6% to 9% in the past, are not a good business to Mexican banks which are used to charging 10% to 14% annual mortgage loan interest rates to their clients.

The cost of operation of having an in-house underwriting department specializing in USD mortgage loans, will offset the benefit of having such a product (case in point, Scotiabank).

The lack of finance legislation which would allow the creation of licensed mortgage brokers (specialized mortgage brokers) to relieve some of the above-mentioned operating costs does not seem to be something happening in the immediate future in Mexico.

In spite of the fact that Mexican banks get some of their funding from the international market or their parent banking companies (most Mexican banks are owned by international banks), in addition to their deposits, at low interest rates, the high cost of banking services and high interest rates are things Mexican banks are not ready to give up, just yet.

And last, but not least, the inoperative services some of these Mexican banks provide through their so called “Risk Assessment” departments, the equivalent to underwriting departments in USA and Canadian banking, and their lack of open minds, creative thinking and vision, will continue to be detrimental aspects of the process

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