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Latin America Investment News on Viva Tropical

One of the Fastest Growing Mortgage Sectors in Central America

Article Summary:

Panama is providing mortgages with preferential interest rates and this has turned out to be a major force in the upward growth of mortgage loans.

Photo Credit: Realty

Original Article Text From Capital:

Preferential interest streamlines the mortgage industry

The residential mortgage financing has grown steadily in Panama, through the enactment of Act 3 of 1985 which established a system of preferential interest in certain mortgage loans.

The centerpiece of that legislation is Article five section defined of preferential mortgage loans could not exceed 4% for loans greater than $ 20,000 or 5% for the financing of up to $ 20,000.

Article six for his part, points out that people with prime mortgages receive annually for the first 10 years of the loan, a tax credit applicable to the payment of federal taxes, in an amount equal to the difference between the income that the bank received if you had to have taken the market reference rate that has been in place for that year and actual income received in respect of interest in relation to each such preferential mortgage loans, as long as the difference does not result than preference section in effect on the date of the respective loan granted.

since the enactment of Act 3 governments have used the benefit of prime interest to support the construction sector as a way to reduce the deficit in the country.

Magnification ranges
from initial tranche $ 20,000 was raised to the range between $ 25,000 and $ 62,500. In the administration of Martin Torrijos, the top of the residences that could cover with the prime rate was increased to $ 80,000 and in 2012 to the present administration, Ricardo Martinelli, was increased to homes valued at $ 120,000.

The housing shortage was estimated in 1985 190,000 homes and currently is estimated at 140,000 homes. Application of Act 3 in the last 27 years (2012) has represented the state treasury about $ 700 million in direct subsidies and another $ 35 million in so-called solidarity bonds for housing.

Meanwhile, the current government proceeded to reform Article 3 of Law 1985 and increased the length of the mortgage loans that fall under the preferential interest.

Profit for ten years
for his part, Gabriel Ten chairman of the National Company (Conep) said preferential interest law only benefit the construction sector has favored Panamanians because it offers the ease of obtaining a home. “The incentive is not given builders or developers, but to those who buy the houses and hopefully keep most Panamanians because it will allow access to your home.”

An important point to know everything a home buyer with the benefit of prime interest is that the same rule for the first ten years. Period must use to make extra payments to capital and achieve a debt reduction when one day enter the 11 year mortgage interest rate market.

The last amendment to Law 3 of 1985 is contained in the Official Gazette No.27262-B on Tuesday April 9, 2013, Law 23 of April 8 this year.
According to the rule are excluded from preferential mortgage system, properties with a carrying value in excess of $ 120,000.

assistant vice president Bank Mortgage Credit General Ricardo Porcell said Preferential Interest Act empowers customers because they “have access to a residential mortgage with a lower rate than if it were subsidized, which is why most people can buy housing, and thus the housing market and the mortgage portfolio have an interesting dynamic. ”
Law considered that it has achieved its objectives “to the lower segments, the customer does not pay interest for 15 years, and the segments high (up to the ceiling of $ 120,000) pays interest very favorable, allowing more people to buy a home, which in turn helps to reduce the housing deficit in the country. ”

Meanwhile, the general manager of the Fund Savings (CA), Jayson Shepherd said that the adjustments made ​​to the Preferential Interest Law, have facilitated the professionals in the country to buy a house whose selling prices above over $ 80,000 were a little more difficult to obtain.
noted that in CA, “the most important segment in our portfolio mortgage is the Prime Law segment, which represents 60% of the total portfolio, so it is our main item.”

Pastor said before the amendments, to acquire a home with a sale price of up to $ 120,000, the minimum monthly income required was close to $ 2,000, while the change in the Prime Law, the minimum income to buy a home at this price is approximately $ 1,600.

Link to Original Article:

From Capital

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