Once again, the path has been directed towards UVA adjustable loanswhich No have had in the past a development at scale as intended, averaging 3% of the total loansreaching its peak of 6% in 2019 and falling to 1% currently.
In truth, they represent problem for banks due to the absence of adjustable deposits in the same currency, and there have been no Securitized transactions in the Capital Market.
On the other hand, the Financing is a fundamental element for the Real Estate industry. Just to mention one dimension of this importance, the contribution of Real Estate to the GDP of the United States ranges between 15 to 20% of it, while in Argentina, the reference value is approximately 5%.
Coincidentally, in United States, 3 out of every 4 dollars moved by the industry are FINANCED. The large North American Mortgage Banks (Federal National Mortgage Association, known as Fannie Mae) are “natural buyers” of mortgages. This energizes the system very smoothly, in a very efficient scheme.
From there it is totally understandable that it has been an obsession of all governments: to recreate the mortgage market. But the Currency instability has been the great impedimentfor which we have appealed to partial solutions, such as UVA loans.
It is also not a coincidence that, during convertibility, these loans flourished in very significant quantity. Clearly, when we get the currency back this will be as natural as it is in general in the world.
Furthermore, we could affirm almost with certainty that nNo one takes a mortgage loan at UVAs, but for a % of the total. They are indeed, “price balance mortgages” More than mortgage loans.
The conclusion is simple: if said financing is intended for “the dollars necessary to complete a transaction/construction,” the question is: Why not make them in dollars directly?
The banks have a significant amount of dollarsand although a problem of “deadline mismatch” (the mortgages would be for several years, and the dollar deposits on average do not exceed 15 days), this it would be temporary because the Capital Market would be HIGHLY DEMANDING of Securitized papers in dollars, in atomized operations that, in short, justify selling them there.
The fact that start with “price balance mortgages”would be a start: with stability the LTV (Loan to Value, % of loan on the value of the property) will grow proportionally.
It is evidently a partial solution, as is today’s UVA regime, but its operation would have natural financing, even from “small savers.” Day by day there are no options for people who want to have a fixed income for a sum of dollars of a few thousand, being that these papers could perfectly be.
This also explains why Real estate agencies and notaries are already carrying out this process currently.and many of these entities do so in an organized and efficient manner, although others take a more informal approach and do not comply with their tax obligations.
In other words, unlike UVA, the dollars are already there, and the Capital Market would absorb them.
More than one reader must be wondering: What if “the dollar escapes” again? What if this plan fails? The answer is given by Financial Engineering: there are tools (deferral of deadlines, capitalizations into the future, subordinations of securities to be sold in the Capital Market, etc.) that solve this.
In the long term all the variables are found, that is how it has been, and that is how it will be.
So: Let’s simplify, let’s go to the dollars, and be patient, that when you can’t do the most, you can do the least. It’s a start, but for many people, it’s the solution.
CEO FIRST CAPITAL GROUP
Source: Ambito
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