Because of the hike in interest rates in the United States, several banks in Panama are already increasing mortgage rates by between 0.25% and 0.50%.

According to representatives of the Banking Association of Panama (ABP), the increase in mortgage loans is mainly due to the upward adjustment that interest rates are experiencing worldwide, which will affect the Panamanian market in the short and medium term.

Carlos Berguido, executive vice-president of the ABP, said to Prensa.com that “… The rise in interest rates in Panama is the result of adjustments in rates worldwide, especially in the United States, which is our main partner in the financial world.”

Berguido added that “… Each bank is a commercial entity that makes its own decisions. Each bank is reacting to that increase in global rates of interest, depending on its own policy. Some are increasing now, others will increase interest later, and some may not increase, but will adjust certain products.”

It is estimated that with the increases, the rates could reach up to 6%, since the local reference rate in the mortgage market ranges is between 5.25% and 5.50%.

On the other hand, Aldo Stagnaro, president of the Asociacion Panameña de Corredores y Promotores de Bienes Raices, said that “… Surely the banks will begin to experiment with different options to attract more users. There are banks that will offer their customers a mortgage interest rate of 6%, but there will be others that will have it at 5.75%, which will cause a process of supply and demand to begin.”

According to the document, in the latest report by the Superintendence of Banks, residential mortgage credit continues to be among the fastest growing types of loans. At the end of June, this financing reached a growth of 6.7%. During the period covered by this report, the balance of mortgage loans totaled $16,465 million, registering an expansion of $1,035 million with respect to the same period last year.