Introduction
The growth of the mortgage loan market in Mexico, which surged during and after the pandemic, has now moderated and entered a phase of stabilization. The macroeconomic environment poses challenges to the dynamism of this financing, but there are positive factors such as low-interest rates and active demand for housing in certain regions of the country.
Mortgage Loan Performance in 2024
In 2024, commercial banking and public housing institutions collectively issued 542,800 mortgage loans, totaling 566.5 billion pesos. This represents a yearly growth of 10% in the number of loans and 12.2% in terms of amount.
Commercial banks alone issued 120,500 loans, a decrease of 4.3% annually, for a total of 277.5 billion pesos, marking an annual increase of 1.8%.
The financing volume was supported by an increase in the average loan size, which reached 2.3 million pesos at the end of 2024, an annual growth of 6.3%.
Challenges and Opportunities
While this behavior can be considered stable, there are challenges ahead that could affect the future performance of mortgage loans. These loans are crucial for acquiring housing in the country.
“The behavior will depend on whether we enter a recession or not. People start to develop risk aversion, which means they won’t take on any form of debt, including mortgage loans,” said Jesús Ramón Orozco de la Fuente, director of Tinsa México by Accumin.
However, there are foundations that could maintain the dynamism of mortgage loans despite macroeconomic challenges, such as interest rates starting at 9%, which could motivate the purchase of new or used housing in the country.
“We might also see more movement in mortgage transfers for better interest rates rather than new home purchases,” Orozco de la Fuente highlighted.
Maintaining a Strong Credit Position
Eduardo Reyes Smith-MacDonald, general director adjunto of mortgage loans at Grupo Financiero Banorte, emphasizes the importance of having a strong position in profitable niches within the mortgage loan market.
Banorte reported a mortgage loan portfolio of 255,760 million pesos during the first quarter of the year, an annual growth of 8%.
The bank has been proactive regarding potential interest rate reductions by the Bank of Mexico, offering attractive rates starting from 8.88%, particularly for high-value properties.
“We’ve seen a very dynamic number of loan requests, with significant growth in credits. We believe this is due to the market we’re focused on, which has a certain buffer, especially in residential housing,” said Reyes Smith-MacDonald.
This has helped maintain the loan supply in line with demand, allowing Banorte to promote mortgage transfers—where an individual moves their existing loan to a financial institution offering a better interest rate.
Regional Performance
Although home acquisition may be a secondary effect of foreign investment, banks hope for growth driven by nearshoring and financing in favored zones.
Certain regions have shown favorable mortgage loan performance over time. For example, Monterrey, Nuevo León, accounts for almost 44% of social interest offerings, along with Mexico City and Guadalajara for medium and residential housing. Tulum, Quintana Roo, is also popular for second homes or short-term rental investments.
Given the current economic situation, with trade tensions with the U.S. and lower growth prospects, Banorte’s director stresses the importance of maintaining a competitive offering in the market.
“We’re not hesitant to make decisions in that regard, with the commitment of ensuring Mexico’s success,” he added, reminding that the bank recently announced a reduction in interest rates for land acquisition loans.
Key Questions and Answers
- What is the current state of the mortgage loan market in Mexico? The market has moderated after a period of growth during and after the pandemic, entering a stabilization phase with challenges from the macroeconomic environment but supported by low-interest rates and active housing demand in certain regions.
- How have mortgage loans performed in 2024? Commercial banks and public housing institutions issued 542,800 loans worth 566.5 billion pesos, with a 10% annual growth in loan numbers and a 12.2% increase in total amount.
- What challenges do mortgage loans face? Experts like Jesús Ramón Orozco de la Fuente suggest that risk aversion during recessions could negatively impact mortgage loan demand. However, factors like low-interest rates and targeted offerings could maintain dynamism.
- How are banks positioning themselves in the current market? Banorte, represented by Eduardo Reyes Smith-MacDonald, has been proactive in anticipating interest rate reductions and offering competitive rates to maintain a strong mortgage loan position.
- Which regions show favorable mortgage loan performance? Monterrey, Nuevo León; Mexico City; Guadalajara; and Tulum, Quintana Roo, have seen positive mortgage loan activity in recent times.
