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Bancolombia (NYSE: CIB) will cut its interest rates for new mortgages by 125 basis points starting on Monday (Feb 9), the largest Colombian bank said in a press release.
The move lowers the annual interest rate on mortgages to 15.75% from 17% and aims at keeping the bank's status as a prime mover in the segment, where it leads with a 30% market share, Bancolombia mortgage loan VP Luis Fernando Muñoz told BNamericas.
The new rates apply to fixed-rate loans and those denominated in the country's inflation-indexed currency unit UVR, he said. For social housing program VIS loans, the rate will stand at 10.5% annually.
The bank is also looking to promote activity in the country's construction sector and tap Colombia's housing deficit, Muñoz said.
The rate cut plan follows in the steps of the bank's Casa Para Todos (CPT) mortgage loan program, which aimed exclusively at residential mortgage borrowers and was launched in 2006.
Last year, Bancolombia issued 1.5tn pesos (US$61mn) in mortgage and housing leasing loans that financed over 27,500 new homes.
Bancolombia had 39.4tn pesos in assets and 5.9tn pesos in equity as of December 31 and commanded market shares of 19.1% in deposits and 21.8% in net loans as of the same date.
Bancolombia services some 5mn customers through 720 branches. The bank also has affiliates in Panamá, Puerto Rico, Miami, El Salvador (Banagrícola) and the Cayman Islands.