Believe it or not, banks now charge less than Infonavit for a mortgage

By Elliot Bullman

The Mexican Banking Association said all interest rates offered by banks at the moment are below 12 percent offered by Infonavit.

For the Association of Banks of Mexico (ABM), the best financing option for the acquisition of a home is still banking, since Infonavit is a more expensive loan.

infonavit mortgage

Competition in the mortgage sector remains in force and banks are struggling to obtain not only more clients but also to attract mortgages that were already given by other institutions.

Marcos Martinez, president of the ABM, said that the best example of healthy competition in the country is that the most expensive interest rate is that of Infonavit.

According to data from the ABM the preferred average rates of bank mortgages range from 10.4 to 11.3 percent.

Enrique Margaín, chairman of the ABM Mortgage Committee, indicated that the sum of one million 600 thousand pesos offered by Infonavit is affecting their credit placement.

infonavit mortgage2

Juan José Huerta Urías, Executive Director of Mortgage Product Strategy at Banco Ve por Más, acknowledged that there are products with rates of more than 11 percent where the gap with Infonavit closes, and this is where banks should do better with attention and agility attract clients to their products.

In 2000 Mexico's banking mortgage loan portfolio was worth 145 billion, a figure that rose to around 200 billion in 2007 and is currently 711 billion pesos.

In this segment, there is a downward trend in the past-due portfolio index, which is at its lowest in 17 years. In 2000 it was 18.5 percent and currently stands at 2.6 percent.

There are also lower interest rates; In 2000 mortgage interest rates were a staggering 20 percent and contracted at variable rate. Now, many mortgages are contracted at fixed rate and the average rate is 10.97 percent.

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