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NORTH AMERICANS INVADE MEXICAN MORTGAGE MARKET

The mortgage market for Americans and Canadians buying in Mexico is continuing to grow despite the setbacks of the recession, according to finance brokers and lenders in the country.
 
“We’re getting a lot more enquiries from US and Canadian buyers,” said Enrique Saldana of Advanced Mortgages. “There was a boom for a while in 2008 and then the problems with the economy hit. But now we’re getting more calls from realtors and developers whose business is starting to pick up.”
 
Mexico’s largest financial institution, BBVA Bancomer, reported its foreign home-loan lending was expected to reach $150 million this year. “We think the market is very big and we are betting on growth,” Isidoro Sanchez, director of mortgage business development at BBVA Bancomer, told the Wall Street Journal. “At least for us, cross-border mortgages have grown.”
 
Buyer attitudes
The recession hasn’t changed buyers’ attitudes towards Mexican mortgages, said Saldana. “Mexico hasn’t been as affected by the mortgage crisis so people have more confidence in the market. We did have a sub-prime market but credit criteria are tighter. While a good credit score in the US is around 620, in Mexico it has to be at least 680 to get a mortgage.”
 
Around 40% of Canadian buyers in Mexico now use mortgages, according to Saldana, with the rest paying with savings or by releasing equity from their primary residence. “But a lot of people like to have their financial guarantees against the house in Mexico not against their main home,” he said. The credit crunch has also led banks in the US to restrict the amount of equity-release lending they offer, forcing buyers to look for alternative finance options.
 
European withdrawal
Advanced Mortgages is predicting that the North American market will grow in 2010, but European lenders are showing little interest in re-entering the Mexican mortgage sector. “Deutsche Bank was serving British customers but they pulled out of the market about a year ago,” said Saldana. “We also had lenders for clients in France, Holland and Italy but there is nothing for the European market right now, except for through developers who have partnered with Spanish banks.”

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Published Wednesday, November 18, 2009 8:33 AM by Kanoa Biondolillo

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