An Argentine family planning to buy a housing with mortgage credit faces two challenges: the difficulty qualifying for demanding conditions that banks require, and then – for the small group that manages to overcome those barriers – the Fear to assume long -term commitments in a country characterized by abrupt changes and difficulty of providing clear horizons.
He Mortgage credit It is very restricted in Argentina. While in many developed countries the purchase of housing with mortgages is the rule, here is the exception. It seems that, with a potential demand for 4 million families who need a homethe local financial system simply expels those who do not meet the requirements.
What are the main barriers to access the mortgage loan?
One is to comply with a certain level of income; Currently the quota-engineer ratio is of the order of 4 to 1 (for example: to pay a share of $ 500,000 I must prove income for $ 2 million.
Another barrier is that this income must be formal and in Argentina there is more than one reality: They coexist a high level of informal employment and independent professionals or small SMEs that must deal with a strong tax burden that hinders their income demonstration.
Then there is the advance, which is usually 25 to 25% of the property value and that we must pay count at the beginning, being a very high cost for the vast majority. Finally, the interest rate is usually challenging and in recent months has increased significantly.
Very few manage to pass these barriers. And, even being able to overcome it, uncertainty persists regarding how the relationship with the bank will end.
After countless crises, inflation, devaluations, falls of employment and salaries, to mention only some, Argentines have the perception that borrowing in the long term is too large risk.
There are cultural, historical and economic factors that contribute to this uncertainty to plan in the long term. It is common to listen to reasoning such as “What happens if I stay without work and I cannot sustain the fee?”, “If inflation returns my salary is going to liquefy”, “the dollar is going to shoot”, or “when there is crisis in my SME I cannot ensure a level of sales.” For all this, Fear is the second barrier.
How to access the dream of your own house
After years of establishing as a mission that of “owners” in Argentina, there are proposals to soften both difficulties.
The difficulty in accessing the overcome with a much more flexible system: we consider the entire income arch that the person has, our advance value is lower and we allow to unfold in 2 and up to 3 payments over up to 24 months.
The quota that we establish derives from the interest rate that is competitive and can be unfolded in 3 types: an initial low quota, another quota during the work phase and another only when the person takes possession; There is updated the value of the quota that contemplates what was used to pay a rental, without impacting the family’s economy.
With respect to the uncertainty factor, we have planned the different scenarios to guarantee the continuity of the plans. For example, if a person loses his job, up to six months Spazios holds it with unemployment insurance where he does not pay share in that period, without any penalty.
If there are changes in inflation, the grape fee does not adjust but is adjusted by CAC, an index much closer to what happens to the value of the square meter.
Another effect to combat fear is the refinancing of the plans: our clients have flexibility both to reprogram their payments, move on to another unit or other building of our wide offer if they will need a further delivery or larger or girl unit, without any penalty.
In summary, limiting difficulties and beliefs on mortgage credit in Argentina are crossed by a mixture of economic, historical and cultural factors, which mainly affect young people.
Spazios CEO.
Source: Ambito
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