After peaking at 38% in May 2004, mortgage loan rates are dropping fast. The average as of May 2005 is 22%, and Miriam Batista, administrator of the Jose Veras & Asociados construction company, told El Caribe newspaper that they could drop much more, to 12-18%. Meanwhile, consumers complain that real estate prices in pesos continue to reflect the RD$50 to US$1 exchange rates of last year.
The reason for the decline: the banks have excess liquidity, and the declining rates offered for certificates of savings in the Central Bank make these every day less attractive. Thus, the bank officers have been told to lend and lend. Real estate investments in the DR have only appreciated, so the focus is now on attracting the over 700,000 of potential buyers to borrow now for that new dwelling.
El Caribe reports that banks have liquidity surplus estimated at RD$43 billion. According to the newspaper, the banks are now trying to duplicate the successful vehicle sales financing events that brought together vehicle dealers and finance companies. Banco Popular has scheduled a home sales fair for the second week of June. Financing of 22% will cover up to 80% of the cost of the dwelling. Scotiabank is offering 30 year loans at a 21% interest rate. The Banco Nacional de Fomento de la Vivienda y la Producccion (BNV), BanReservas and BHD bank also have reduced interest mortgage plans.