Colombians, like the rest of the world’s citizens, are facing a double blow from COVID-19. Not only are thousands of people dying from the virus, but we are witnessing the strong economic impact that comes from the measures that are being taken to protect our health.
However, within all this panorama, there are some situations that would favour the acquisition of a home. These favourable situations mainly refer to the decrease in interest rates, which, given the current conditions, are expected to continue at low levels. Additionally, the purchasing power of Colombians has been growing in recent years, which means that buyers are in better conditions to purchase a home compared to previous years.
In the month of March 2020, the average interest rate for home mortgages reached 10.37% (this number applies to the Non-VIS housing category), one of its lowest levels in history. This shows a significant improvement since November 2016, when the rate was 12.48%, and an even greater gain compared to the April 2004 rate, when it reached 20.19% (in 2004 inflation it was two points higher than it is today).
Although they have these data, many will wonder, how is home buying affected? Well, the mortgage interest rate represents the amount that buyers have to pay for their bank loans. The lower the interest rate, the fewer buyers have to pay banks when they take out a loan.
Now for the same money as before, a loan allows buyers to receive more money since less interest is paid. In this way, the buyer would need less money to buy the home they had in mind, or even maintain their budget while looking for a larger one.
Not only has the cost of financing dropped, but the purchasing power of Colombians has increased. Since January 2017, the purchasing power, which includes the comparison between salaries, interest rates and house prices, has grown by 12% (according to data from Galleria Inmobiliaria 2020).
This is an obvious advantage for people looking to buy, as they now have the opportunity to use less of their income to purchase the same home as before. Finally, housing in Colombia has been improving its specifications that meet new regulations every year and that is why buyers have a variety and better quality of their products at their disposal. capital smart city too has opted to figure out a way on how to provide with safe housing.
Despite the difficulties humanity is currently experiencing, there are opportunities that can be seized. The combination of low-interest rates, a fall in housing prices relative to citizens’ incomes, and an increase in the variety of offerings represent a unique opportunity for people who are looking to buy a home in the country today.