Wednesday, December 6, 2023

Mortgage loan and the best time to take it

He financial market Dominican Republic currently offers the highest interest rates in the last 17 years. The current level of 8.5% had not been exceeded since mid-2006 when the central bank placed the rate of monetary politics (TPM) at 8.0% per year. Anyone would think that the best time to take out a mortgage loan is when you need to buy a home or when the financial market has the best financing conditions.

For the Executive Vice President of the The National Association of Savings and Loans (Alnap), Gustavo Zuluaga Alam, the best time to opt for mortgage financing is when the fee to pay for housing financing does not exceed 30% of income.

It maintains that anyone, regardless of whether the rates are low or high, can take a loan to buy their home as long as the monthly payment does not exceed 30% of their income. Because? The Alnap executive explains that the remaining 70%, taking into account the proportion allocated to the loan is free, will have to be necessary for the person to support the other expenses.

“It is good to clarify that the Finance system In a general sense, not only in the Dominican Republic, but throughout the world, your business is not to award a home, since our business is not real estate; Our business is to have money and that this money is repaid in order to lend it again, ”he explained.


Zuluaga points out that this dynamic is what generates development and a positive impact in world economies that translates into well-being for people. However, he says, when one analyzes where the blackberry is in the mortgage system levels are at 0.70%, which is practically nothing.

He maintains that the segment served by the savings and loan associations He values ​​housing so much, culturally what Dominicans pay first is the mortgage financing fee. He highlighted that if the default is so low, it is also due to the fact that there is an accompaniment and, therefore, a protection of that debtor to understand what your house means.

In addition, he indicates, it must be taken into account that families, generally middle-income, have found it difficult to acquire or finance a home worth two or three million pesos, which is why they take such great care of this property. “We are talking about any initial means RD$300,000 and that is not achieved overnight, so it generates a greater commitment,” he explains.

In any case, according to Zuluaga, the award levels in Alnap are extremely low and decisions are only made when it is a matter of “force majeure” and that it cannot be saved. Among the mechanisms used to avoid adjudication is refinancing, which implies extending the term of the loan so that the installment falls. He points out that this type of strategy is done with any type of loan.

Another option available is restructuring in cases where there is an interest related issue, especially when it comes to job loss or illness or any other valid reason. The Alnap executive highlights that the AAyP will always seek a solution to each difficult situation in which a client may find themselves.

If the situation is extreme, he refers, they advise the client to sell the house so that he does not lose everything, that is, that he keeps something. “There are many alternatives and each case obeys very particular situations,” she stated during an interview on the Dinámica Económica program, which is broadcast on RNN Channel 27.

The executive vice president of Alnap informed that this financial entity now has around 14,000 financed housing and more than 300,000 active clients. Regarding the use of technologies, he highlighted that this financial institution, before the pandemic, had been applying a process of technological transformation which turned out to be positive.

“It took us, and I have to say it in a very positive way, that prior to the pandemic we had launched our new application through which our clients could carry out all kinds of operations,” he explained.

He valued the support that as a financial entity they have received from the monetary and financial authorities through the Central Bank (BCRD) and the Superintendence of Banks (SB), as they have promoted the digital development of the sector. He highlighted the investments that they also make in cybersecurity, understanding how important it is for the system.

The Dominican Diaspora

Alnap reported that in 2022 it experienced positive results in important areas of the business. Proof of this is the behavior of the credit portfolio by risk category, in which it is worth noting that credits with an “A” risk rating represent 94.5% of the total portfolio.

Meanwhile, the home acquisition loan segment continued to be its main bet, with a total portfolio of 65%, of which 27% corresponded to loans granted to the Dominican diaspora.


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