Banks have disbursed 5 billion pesos so far in mortgage-backed loans adjusted by units of purchasing power (UVA in Spanish), as evidenced by the records of the Central Bank of Argentina (BCRA). Each day, banks grant UVA-adjusted loans for a total amount ranging from 50 to 70 million pesos, setting a record of 1.1 billion pesos in March, and continuing the growing trend of more households having access to loans.
In addition, banks disbursed 2.1 billion pesos in UVA-adjusted personal and pledge-backed loans. A total of 7.1 billion pesos have been lent since the implementation of this facility. Sixteen institutions have already adopted this credit line, with Banco de la Nación Argentina being the last to join. The other banks are BBVA Francés, Ciudad, Córdoba, Credicoop, Galicia, Hipotecario, HSBC, ICBC, Itaú, Macro, Patagonia, Provincia de Buenos Aires, Santander Río, Supervielle and Tucumán.
At the same time, the stock of UVA-adjusted time deposits posted a sharp growth, surpassing 1.2 billion pesos. Banks offer positive real interest rates for UVA-adjusted deposits. These deposits work as a standard time deposit, except that they bear an inflation-adjusted return, and must be placed for 180 days at a minimum. By way of such facility, the BCRA accomplishes its objective of ensuring a positive return in pesos for depositors, thus preventing inflation from wiping out people’s savings.
UVA-adjusted household loans are particularly favorable for customers as installments are similar to the amount paid for a rent and represent a fairly stable share in the total income of the family. It is much easier for customers to apply for a UVA-adjusted loan than for a conventional mortgage-backed loan at a fixed rate. The last installments of fixed-rate loans are very low as a result of inflation, but initial payments are so high that only customers with remarkably high income are eligible to apply.
UVA is a unit of account that is daily adjusted to the consumer price index. Today it amounts to 18.38 pesos. The UVA is especially convenient in long-term financial agreements, as both borrowers and lenders are assured a determined real amount for future payments, avoiding the risk of unexpected inflation or disinflation on contracts. In fact, the ProCreAr Plan applies this unit of account to index state-subsidized home loans. UVA-adjusted loans and savings are essential tools for the BCRA to attain the objective of developing a deeper and more inclusive financial system, thus boosting home loans.
Report | What is the maximum amount lent by each bank based on customers' income level? Article on Ideas de Peso: Créditos hipotecarios UVA: ¿es un instrumento que puede ampliar el acceso a la vivienda?
April 24, 2017