August 28, 2021


Business and Funding News

Mortgage loan portfolio reaches RD $ 232,120 million as of May

Mortgage loan portfolio reaches RD $ 232,120 million as of May

Housing is a durable asset, perhaps the most important physical asset that can exist for families. Its financing is an essential element. In the Dominican Republic, the provision of mortgage loans has registered a significant increase despite the pandemic in 2020.

The mortgage loan portfolio as of May 2021 closed at RD $ 232,119.6 million through 110,477 loans. Multiple banks have 66.3% of the total, that is, RD $ 154,830.9 million.

According to the Superintendency of Banks (SIB), the mortgage loan portfolio increased RD $ 16,168.9 million, 7.4%, going from RD $ 215,950 million in May 2020 to RD $ 232,119.6 in the same month of this year.

In this sense, the amount of loans captured by this instrument increased from 106,839 in 2020, to 110,477 in 2021, that is, 3.4% reflects the net variation of 3,638 new mortgage loans.

During the first quarter of 2021 it accumulated a total of RD $ 228,118.8 million. The number of loans granted during the January-March period of this year was 109,529. This behavior occurs in a positive way even as the country recovers from the covid-19 pandemic.

Multiple banks accumulate a mortgage loan portfolio for RD $ 154,830.9 million at the end of May of this year.

Regarding the amount of financing, the multiple banks have granted 110,477 mortgage loans. In that sense, as of May 2020, multiple banks had disbursed a total of RD $ 147,158 million, granting an amount of 68,106 loans. When comparing these two periods, it is concluded that they disbursed RD $ 7,672.9 million in one year, which in percentage terms means an increase of 5.2%.

On the other hand, the savings and loan associations (AAyP), for the period May 2021, have a portfolio that amounts to RD $ 76,504.1 million, offering the amount of 40,087 mortgage loans. For the same period of 2020, the AAyPs had disbursed RD $ 68,160.5 million through 38,316 loans.

The total amount that the AAyP have disbursed is RD $ 8,343.6 million, which reflects an increase of 12% between May 2020 and the same month of 2021. Currently, the construction sector contributes about RD $ 545,447 million to the country which is it translates into 15% of the economy, according to data from the Central Bank of the Dominican Republic.

Interest rate

The rates to acquire a mortgage loan in the main commercial banks range from 6.58% to 14.73%, while the average rate is located at 10.45%.

Credit corporations have the highest rates in the market with 14.73%. Then there are savings and loan banks with 12.78%. According to the available data, the best average interest rate is in the multiple banks with 10.22%, then the AAyP whose average is 10.87%.

Construction sector

In June 2021, the square meter of housing construction increased by 30%. Despite the fact that the cost of materials in the sector has registered an increase, in recent years Dominicans have not stopped requesting loans to have a decent home to live in.

The president of the Dominican Association of Housing Builders and Promoters, Jorge Montalvo, explained that as a consequence of the rise in prices in this sector, the square meter per unit of housing has soared between 25% and 30%. “This has had a drastic impact on homeownership, especially for the most vulnerable class,” he said.

He indicated that another factor that has influenced the increase in prices has been the accumulated depreciation of the dollar in the 2019-2020 periods. He pointed out that this has reflected significant effects on the monetary value of middle-class homes, since one out of every six homes for sale has its price indexed in dollars.

In this sense, the average amount of loans has increased instead of decreasing with ranges of higher amounts.

This is clearly demonstrated by the data from the construction sector, which did not stagnate despite the aftermath of the economic crisis. “We have continued to boost the economy, buildings and homes nationwide,” he said.

Montalvo stated that the relationship of the construction sector with the loan portfolio is direct because it represents great importance for the economic development of the Dominican Republic.

“This close connection of both sectors shows that according to the demand presented by the construction sector, the financing portfolio will also be reflected in the increase,” he added.

Loans granted

The number of loans granted during the January-March period of this year was 109,529. Multiple banks lead the first place with 69,441 loans granted, followed by AAyP with 40,087. In third place, there are savings and loan banks with 301 loans granted.