Pension reform having an effect on Peru's mortgage loans

Tuesday, November 29, 2016

Mortgage loans in Peru increased 5.33% year-on-year, said Peruvian banking association Asbanc.

Compared to the previous month, soles-denominated loans declined 0.006%, while US dollar-denominate mortgages dropped 1.86%.

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Mortgage loans system totaled 83.3bn soles (US$11bn) by the end of October. Soles-denominated mortgage loans accounted for 76.6%, up 4.27 percentage points year-on-year and 0.53pp over the previous month.

The recent slowdown in mortgage loans "is explained by the increase in amortizing payments by clients using 25% of their accumulated pension funds, and because of the weakening of local demand," Asbanc said.

A pension system reform approved in April allows members of private pension fund managers to withdraw up to 25% of their accumulated funds at any time to buy a home or amortize a mortgage loan.