Major banks compete for mortgage funds in first FGS auction

Argentina’s biggest banks are competing for 200 billion pesos in the first auction of funds reserved for new first-home mortgages. The auction forms part of the government’s effort to revive long-term mortgage lending after the recovery that began in 2024 lost momentum this year.

The money comes from the Sustainability Guarantee Fund, known by its Spanish initials FGS. The programme is designed to hold 10 auctions of 200 billion pesos each, potentially mobilizing 2 trillion pesos. Its central aim is to solve the lack of long-term funding that has made it difficult for banks to offer 20- or 30-year mortgages.

Macro, Hipotecario, Ciudad, Santander, Supervielle and BBVA are among the banks taking part. Each bank can receive a maximum of 40 billion pesos, or 20% of the first auction. Banks compete by offering the interest rate they will pay the FGS, with higher offers improving their chances of receiving funds.

The programme offers two funding options: one-year deposits with a minimum rate of 2.5% and five-year deposits with a minimum rate of 4.5%. Mortgages financed through the programme cannot carry rates above 7.5%. They must run for at least 15 years, cannot exceed 150,000 UVA per loan, equivalent to slightly more than $200,000, and must finance a first home.

Once deposits are established, banks will have 120 calendar days to convert the money into mortgages. The FGS can recover funds that banks do not lend. The government estimates the programme could generate between 17,000 and 18,000 new mortgage loans, while some banks have already begun lowering their rates.

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It was something the banks had been asking for.