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Interest Rates on Mortgages Resume A Downward Trend and Reach A New Historical Low

Posted by Leanne Dudley on November 14, 2019
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Interest rates on mortgages averaged 1.96% from 24th to 31st of October.
Those with consumer, commercial and trade loans also experienced declines from 9.4% to 4.9%, then again to 3.2%.

Mortgage loan rates continued the downward trend and recorded a new historical low. 

According to data released on Thursday by the Central Bank, mortgage loan rates averaged at 1.96% on October 24th to 31st. The previous week, mortgage loan rates were averaged at 2.03%.

Thus, they accumulated a decrease of 0.23% compared to the same week last month when they stood at 2.19%.

Overall, in October, rates averaged at 2% compared to September where they averaged at 2.2%.

It is estimated that this decrease conclude to savings of up to 10% in the value of the monthly dividend. Furthermore, a 15% savings in the payment of the property to the bank is estimated, compared to the original price.

Other Credits

However, the rates of the mortgage loans were not the only costs that fell in October. There were also decreases consumer, commercial and foreign trade loans which experienced declines from 9.4% to 4.9%, then again to 3.2%.This is compared to the decrease in rates of 20% to 5% and again to 3.5% in September.

Reductions in consumer and commercial interest rates are explained by lower rates on credit card products and overdrafts. This is in the context of increased flows which was explained by the Central Bank. 

In foreign trade, the decline was due to lower rates and higher incidence of export credits.

On the other hand, deposits in pesos of 30 to 89 days, 90 days to one year and one to three years, maintained interest rates similar to those of the previous period (2%; 2.1% and 2.1%, respectively), showing higher flows.

Meanwhile, the interest rate on receipts over three years increased to 2.8%, compared to 2.3% in September.

Higher Prices

This context of low rates may be favourable for those who are considering to refinance their mortgage credit.

However, in the case of those who are thinking of buying a home, it should also be considered that the low levels of interest rates contrasts with the rise in prices.

According to ‘Informe Trimestral de Viviendas de Mercado Libre’, developed by the company e-commerce data for their site Portalinmobiliario.com, departmental prices continued with the upward trend and completed six consecutive quarters with advances of over 4% in the third quarter. In that period, the average sales value in Greater Santiago rose by 4.1% compared to the same period in the previous year.

The highest values ​​were recorded in the municipalities of Vitacura with 85.9 UF (Unidad de Fomento) per square meter. They were followed by Lo Barnechea with 84.5 UF and Las Condes with 81.1 UF.

Meanwhile, La Cisterna had the biggest increase in prices with a rise of 9.5% compared to the third quarter of last year to UF 40.2. They are followed by Conchalí who had an increase of 9.4% to 38.9 UF;  Independence had a rise of 8.4% to 52.1 UF.

 

Disclaimer:
Translated from ‘Tasas de interés de hipotecarios retoman tendencia a la baja y alcanzan un nuevo mínimo histórico

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