Although each entity can directly offer better conditions, the three best banks are Banco de Chile, Falabella and Consorcio. They are considered the most attractive.
The Central Bank reported on 24th September that interest rates for mortgage loans have reached their historical lows again. This has been the case in the last four months after the cuts in the Monetary Policy Rate; the issuing institute itself has announced this.
Interest rates could even continue going down by the end of the year. This was predicted by the Financial Operators Survey (which sees a reduction of another 25 basis points by December). In the last recorded week, between the 8th and 15th September, mortgage rates reached an average of 2.14% UF. This is compared to 2.19% UF the previous week and 2.44% UF a month ago.
To make an international comparison, mortgage rates in Peru are also at their historical lows; the average on 20th September was 7.28% nominal (with an estimated annual inflation of 2.5%).
According to experts, a reduction in the rate of one percentage point could mean a reduction of up to a tenth in the dividend paid each month and even more than 10% in the total value paid to the bank.
By searching the Financial Market Commission’s (CMF) public-use simulators, it is possible to determine that three banks imitate each other in terms of instalments and payments. This can be done through determining those offering the best mortgage rate conditions for fixed rate loans; their dividends include insurance.
For example, for a loan of 3 thousand UF for 25 years, the Bank of Chile offers a mutual endorsement with a rate of 2.56%. The PPA (Annual Equivalent Charge, the index that allows to compare the alternatives of credits under equivalent conditions that includes all the costs and associated expenses) is of 2.98%. Therefore it is a little more expensive than Consortium, whose rate is 2.70% but whose PPA is 2.94%.
Now, these conditions are offered by financial institutions openly and publicly. In reality, many banks have special offers for people who trade directly.
‘In recent times, I have offered up to 1.2% rates to refinance a loan’, admitted an executive of a bank that is not among those three.
He admitted that both he and his colleagues are at full duty with refinancing or mortgage loans.
Where to keep an eye out
The rush to carry out these financial transactions on the Internet, both for refinancing and housing loans, have skyrocketed by 50% according to data from the Compare platform.
The number of people entering this platform has grown, on average, by 22% monthly during the last six months. In just last month alone, the number of users who went to Compare to quote a mortgage loan was about 75 thousand people; in August 2018 they were 20 thousand.
As the bank executive consultant pointed out, they recommend that once the bank is chosen, it is best to negotiate the credit directly with the bank. Depending on the client’s financial profile, it can make the interest rate even lower.
‘You must make several quotes and choose the best option. It will always be the lowest final quota,’ emphasizes Francisco Ackermann, commercial manager of Capitalizarme.com.
The plummeting mortgage rates are big news. That is, for those who want to refinance their old home loans or for those who want to buy property right away. However, it doesn’t work for those who want to buy a green or less white property. ‘Green’ properties would mean the purchase of land, whereas, ‘white’ properties are move-in ready.
“If you buy a ‘white’ apartment, it is only a promise of a property and won’t be finalised for another two years. This will be when the building is move-in ready and when you have to get a mortgage. A mortgage at a rate that will no longer be the same as when you originally bought the property. Those who sell a white or green property will project their prices by two years; they will have a greater value than housing that are move-in ready,” Ackermann says.
Translated from ‘Los tres bancos que ofrecen públicamente las mejores tasas hipotecarias‘