The banking entities launched a report on the bills presented in the National Congress to modify the conditions that UVA mortgage loans have today. As they maintain they would end up making the development of loans even more difficult.
Mortgage credit in Argentina is low in relation to its GDP, since it represents less than 1% of the product. In the rest of the countries in the region, the mortgage loan to product ratio is around 8% and in some cases reaches 27%.
From the birth of the UVA in 2016 to 2019 approximately 105,000 loans were granted UVA home mortgages. However, as of 2019, practically no new mortgage loans were materialized due to the adverse economic conditions that the country went through.
The installments of the UVA mortgage loans have a capital component and an interest component, like any other loan. Instead of owing pesos, borrowers of these loans owe UVA, which is adjusted by the CER coefficient, which, to simplify, could be said to be adjusted for inflation.
Given how complex it was for borrowers to pay the hefty installments, bills appeared in the National Congress to change the conditions under which these UVA mortgage loans for housing were granted.
For the banks, these new proposed regulations “hinder the development of mortgage credit in Argentina”. They maintain that “although the declared objectives are laudable, the chosen instruments would lead to results opposite to those sought.”
In this regard, they warned that this situation was clearly exposed by the Banking Associations, Banco Nación, Banco Ciudad, BCRA and other financial sector leaders at the joint meeting of the Finance and Budget and Treasury Committees of the Honorable Chamber of Deputies of the Nation on 09/01/2022.
Most of the bills, which have parliamentary status, maintain, “propose the compulsory recalculation of quotas and retroactively, the imposition of new charges/contributions on the operation even retroactively, setting maximum rates, among others elements that will affect access to housing in the future”.
“This would be an economic relief at most to the 100,000 families who have already agreed to buy a home with a mortgage and would harm the three million families that have housing problemswhose solution requires access to mortgage credit,” they add.
Regarding projects that, for example, propose a one-time contract renegotiation, a maximum rate of 5% (retroactively and in the future), access to a stabilization fund, at no cost to the applicant, the suspension of executions legal proceedings and contributions for credits already granted by the State and financial entities, argued that “they affect legal certainty, impose new costs on the State and on users of the financial system, and substantially reduce the possibility of having a vigorous housing credit market in the future”
They also expressed that “if Congress considers that there is merit so that the 100,000 families who have accessed housing with UVA mortgage loans should receive help to pay their installments, The way provided by the republican system is the creation of an explicit subsidy, approved by Law“.
In parallel, “The State could increase the deductible amount on Income Tax for interest on mortgage loans, equivalent to the non-taxable minimum of rents. This measure would be a good solution, which would alleviate the fiscal situation not only of the current ones, but also of the future debtors of the UVA mortgages”.
Source: Ambito
