Mexico's Housing Refinance Boom Lifting Spending Isabella Cota - Bloomberg News
go to original September 27, 2014

MEXICO CITY — Homeowners in Mexico are taking advantage of record low mortgage rates that have spurred refinancings. After the collapse of the country’s three biggest homebuilders last year stalled new construction and slowed lending, banks including BBVA Bancomer and HSBC Holdings have turned to refinancing for growth. That could provide a jolt to Mexico’s sluggish economy by giving consumers more money to spend.

"The impact that this has on the economy is that it frees up a part of people’s income to be spent on consumption, which we see spiking upwards in the coming months," said Carlos Capistran, chief economist at Bank of America Corp. Mexico in Mexico City.

The average interest rate for all types and maturities of home loans dropped to a low of 10.8 percent in July, from 12.1 percent a year earlier, according to the central bank. Policymakers have cut benchmark borrowing costs by 1.5 percentage points since early 2013.

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