Banks Lead the Way: New UVA Credit Lines for Home Purchase and Construction Launch Amid Economic Challenges

After Banco Hipotecario relaunched new lines of UVA credits for home purchase or construction, another bank has joined the movement – City Bank. Public or semi-public banks are leading the way, with private banks expected to join later in the year.

Banco Ciudad’s initial proposal includes offering a maximum amount of 250 million pesos, terms up to 20 years, and an annual nominal rate of 5.5%, which can drop to 3.5% for properties in Buenos Aires microcenter. The aim is to encourage investment and transformation of areas affected by the pandemic. The capital owed will be adjusted with the value of the Purchasing Value Unit (UVA) to counter inflation.

On the other hand, Banco Hipotecario has launched its credit line for a maximum of 250 million pesos over 30 years. The rate offered is 8.5%, but borrowers with their salary account at the bank will get a reduced rate for the first 12 months. Both Banco Ciudad and Hipotecario agree to prioritize borrowers with salary accounts at their respective banks and will finance up to 80% of transaction value.

In response to concerns about inflation, National Bank plans to offer CER mortgages and intends to introduce a safeguard to protect debtors if inflation surpasses income. This safety measure will kick in if the fee-income ratio exceeds a pre-set limit during the loan term. Despite challenges, UVA mortgage delinquencies are less than 1% of loans granted between 2016 and mid-2018, suggesting relative stability in the market.