In a seemingly contradictory series of articles, both the Listin Diario and the El Caribe carry headlines citing the success of the real estate fair being held by the nation’s largest private banks, Banco Popular, and how abundant money has lowered interest rates on housing loans. According to the Listin Diario, the banks and the Savings and Loan associations have begun by launching an interest rate war that is resulting in lower rates for potential homeowners. The S&Ls have huge reserves of cash for those purchases because the new restrictions placed by the IMF on asset evaluations are much more lax. Housing and vehicles are two of these areas. Banco Popular took the lead and organized a “Real Estate Fair” that brought 32 real estate companies and construction companies together with an offering of 15,000 housing units and many offers of financing at 14.95% in some cases. The Popular S & L, the largest savings and loan company in the Dominican Republic, offered financing at 16%, and the Cibao S & L, the number two S & L, offered new credit customers a 15% rate. Scotiabank sweetened their offer by removing closing costs from their 30-year mortgages.
Nobody really knows who fired the “first shot” but whether it was the Banco Popular, the Cibao S & L or Scotiabank, interest rates are now the focus of these and other institutions. Since the property or the vehicle is the guarantee of the loan, the financial institutions are trying to get the money in their vaults out onto the street. Many institutions are now “crossing over” into areas that were formerly the exclusive territory of the S & Ls or mortgage banks. New banking laws practically eliminated the mortgage bank as such, and most of them became full-service banks, including housing loans among their services. Now the savings and loan associations, formerly dedicated almost exclusively to financing housing, are not delving into auto loans as a means of getting new clients.
The real estate fair put on by the Banco Popular has apparently revolutionized the loan markets, and El Caribe says that the huge amount of clients has moved the bank to keep the fair going for another week. According to the paper, the bank made loans of RD$1.2 billion during the first few days of the fair. As of midday Sunday, over 900 housing units had been sold.