Buenos Aires Real Estate

The world’s financial crisis has unavoidably had an impact on Argentina’s mortgage loan industry.  Banks’ mortgage loan rates have already increased and it is foreseen that the percentage financed and maximum loan amounts will decrease.  Income requirements will also become stricter.  Some banks have already suspended their loan offerings and in other banks loans have been granted to less than one percent of their customers. 

From 2004 to the end of 2007, fixed rate loans experienced a steady increase.  As the subprime crisis began in the United States in late 2007, this growth stabilized.  The ensuing financial crisis produced an increase in loan interest rates, as a result of increased funding costs, and a decrease in the demand for loans.

In the first quarter of 2009, the terms and conditions of mortgage loans at different banks varied. 

The Banco Hipotecario (mortgage bank) offers a ten-year mortgage loan with a fixed rate of up to 25.75%.  Variable rate loans are available for up to twenty years; a ten-year variable rate loan runs 18%.   Loans will be given for up to 70% of the sales price, for a maximum of $500,000 pesos.  Household income requirements are the same for employees, self-employed or retired applicants.  The bank requires a documented employment history covering the past two years and a minimum monthly income of $2,500 pesos. 

A study conducted by Banco Hipotecario in 2007 revealed that fifty percent of those acquiring a mortgage loan were renting at the time they requested the loan; eighty percent were employees.  The average applicant was forty years old and had a family income of $5,000 pesos.  The bank also finds a very low loan payment deliquency rate, which they attribute to the fact that most of their applicants chose fixed rate loans. 

Banco Ciudad de Buenos Aires has recently adjusted their terms and conditions but has still maintained the volume of loans granted and is considered one of the major housing loan providers in Buenos Aires.  The bank has different loan programs.  Under Ciudad Vivienda, the bank offers twenty-year loans with a variable rate of 14.97%, ten-year loans with a variable rate of 14.43%, and a five-year loan with a fixed rate of 15.90%.  The maximum loan amount is $500,000 pesos.  With Ciudad Inquilinos (a program aimed at renters) the bank offers loans of up to $300,000 pesos payable over twenty or thirty years, with a fixed rate of 12.5% for two years and a variable rate of 12.5%. 

Banco Ciudad de Buenos Aires offers other special mortgage loans.  Special loans are offered for properties purchased in the historic neighborhoods of San Telmo and Monserrat with a fixed rate of 15.9% for five-year loans and a variable 14.97% rate for twenty-year loans.  Special loans are also granted to female heads of households for the purchase, extension or remodeling of residential property in the city of Buenos Aires and the outlying Greater Buenos Aires area.  Loan maximums for the purchase or extension of a residence are 75%; whereas, 100% financing can be acquired for remodeling.  Five-year loans are offered at a fixed rate of 13.9% and twenty-year loans for a variable rate of 12.5%. 

The average mortgage loan customer at Banco Ciudad de Buenos Aires is forty years old.  Almost half of those given mortgage loans are bank customers and sixty percent are men.  The bank is considering offering refinancing opportunities for those customers who are having difficulty keeping up with their mortgage payments. 

Banco Nación reports that over the past few years they have financed around 20,000 new mortgage loans for a total of $2,000 million pesos.  Under their plan, Mi Casa, and their Plan Inquilinos (a special renter’s plan) they have granted loans of up to $210,000 pesos providing 90% financing for up to thirty years with fixed rates of 14.75% until 2011.  When that term is up, they plan on applying interest rates averaging four percent above time certificate deposit interest rates, as specified by the Banco Central (national central bank). 

BBVA Banco Frances currently offers mortgage loans for the purchase, construction and remodeling of a residence.  However, they have discontinued fixed rate loans and now offer variable loans and mixed rate loans, which use a combination of a fixed and variable rate.  The variable rate loan is at 26.5%.  The mixed rate loan starts with a fixed rate of 26% for the first two to three years.  This rate goes up to 27% for the following four to five years, and then switches to a variable rate.  Up to sixty percent of the property’s value can be financed for a maximum of $300,000 pesos for up to fifteen years.  The minimum income requirements are $1,000 pesos for single applicants and $1,200 pesos for a family. 

BBVA Banco Frances has different terms and conditions for both residential remodeling loans and construction loans.  Remodeling loans are granted for up to 30% of the property’s value, for a maximum of $300,000 pesos and for terms up to eight years.  Construction loans are granted to finance up to 50% of the project, up to $100,000 pesos with terms up to fifteen years.  Applicants must have an income of $4,000 pesos per month. 

Regardless of the bank granting the mortgage loan, property owners who opted for variable rate loans have experienced some dramatic increases in their loan rates and as a consequence their monthly payments have skyrocketed in a short period of time.  Property owners who took out loans over the past three years with rates between 8% and 8.7% are now faced with interest rates of 15% to 24.22%.  Monthly mortgage payments which ranged from $2,290 to $2,700 pesos are now $3,150 to $4,912 pesos.   Salaries have definitely not increased in those proportions and some self-emloyed individuals have actually experienced a decrease in business and income.

Related articles on Buenos Aires Real Estate Guide:

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Why Mortgage Loans are Lacking in Argentina