Mortgage loans: first auction clears the way for 13 banks to offer ANSeS-funded mortgages

Argentina has completed the first auction of fixed-term deposits from the ANSeS Sustainability Guarantee Fund, allowing banks to finance new inflation-linked mortgage loans. The Central Bank received offers from 18 institutions totaling more than 258 billion pesos and awarded the full 200 billion pesos put up for the first auction.

More than 80% of the accepted bids focused on the five-year term. The 12-month tranche allocated 35.57 billion pesos at UVA plus a weighted average spread of 2.67%. The five-year tranche allocated 164.43 billion pesos at UVA plus a weighted average spread of 4.94%.

The results indicate that the Central Bank accepted higher rates than the minimum levels initially set. It did not identify the winning institutions. Banks that subscribed must offer mortgages lasting at least 15 years, with an annual rate no higher than UVA plus 7.5%. Each borrower may receive up to 150,000 UVA, currently equivalent to about 315 million pesos, or roughly $206,000.

The loans may finance the purchase, construction, expansion or renovation of a first home. Official estimates suggest the program could generate between 17,000 and 18,000 new mortgage operations. Banks expected the first loans under the new conditions to become available between October and November.

This was the first of 10 planned auctions. Each will offer banks 200 billion pesos through one- and five-year UVA deposits. The government hopes the program will address a maturity mismatch between funding concentrated at one to 30 days and mortgages that require terms of 15 to 30 years. Housing loans rose 41.6% in real terms in August, driven mainly by UVA-adjusted credit.