The mortgage loan, a boom that has been punctured and will delay in return – 01/13/2019

One of the factors that explained the increase in activity in the real estate market from mid-2016 to mid-2018 was the mortgage lending reappears, especially for the UVA variant, that is, credits whose participation – and the remaining debt – is adjusted to the inflation rate. For this reason, the virtual disappearance of mortgage credit due to devaluation and the deterioration of wages – measured in dollars – explains the collapse of real estate activity and falling real estate prices.

Since 2016, more than 120,000 credits of this type, but the dollar trigger that began in April 2018 and did not stop accelerating until October, froze this operation, although it left an argument in place: if anyone took UVA credit they took the opportunity to move from tenants to tenants, or if they run the risk of losing their home for not being able to face very high quotas.

The debate intensified because, during 2018, inflation – and consequently UVA quotas – grew faster than wages.

In addition, delinquency is insignificantand does not affect more than one in 1,000 credits.

This can be explained by the fact that, despite the increase in shares, the stock yield index was modified, but much more leniently: if a loan started with a 20% rate of income, today this relationship is at 25%.

Another factor to take into account: UVA debtors who have to tighten their belts to increase the quota, do it as owners. As tenants, they would suffer the adjustment of the monthly payment – perhaps in line with inflation – when the lease is renewed.

So far, the panorama that must face those who have already had their UVA mortgage credit.

In the worst case, of course, there are those who have not been able to get on the wave. Today they suffer "the double nelson": sharp increase in property values ​​weights and a salary that has been left behind. In sum, it takes many more pesos to buy the same property, but since the salary did not match, the initial rate, so high relative to a family's income, leaves credit out of reach.

The question is when mortgage credit can be repossessed. "It is not the level of inflation that moves the values ​​of the loans, but the dollarized price of the properties." Rounding: Properties rose (in pesos) 100%, inflation 50% and wages 40%, "said the expert Ergasto Riva, implying that until there is a recomposition in dollars of wages, there will be no reactivation of credit.

That does not seem to happen soon, as the government is willing to keep the beneficial share of the devaluation – lower wages in dollars – an express idea in maintaining a competitive exchange rate.

In any case, the government has taken some steps to alleviate the situation.

He is recognized by Alejandro Bennazar, head of the Argentine Chamber of Real Estate, when he points out the possibility that mortgage loans could finance so-called "well operations". This would allow the builders to finance themselves directly from funds contributed by the final buyers of the property and would alleviate the financial cost of the real estate project. This reduces the costs to the builder, which too – or devaluation – today has costs per square meter 30% lower than a year ago.

"Today is a great time to face a construction because costs have dropped significantly," agrees Juan José Cruces of Di Tella University.

Apparently, shortening the distances with the dream of the house will take time.