Paraguay: the cost of home ownership through the local banks

By Sara Carreras, Diario 5 Dias, Paraguay

It is important to have significant knowledge about the interest rates charged by intermediary entities, they could be passive if you deposit the money in the bank, or could be active funds if you request a loan, in this case we will refer to the active funds, exactly on the housing loans.

Bank customers should have information on what is being offered to them by any bank, more than knowing what will be the monthly fee they will have to pay, one must have all the necessary information before applying for a credit line of great magnitude such as a home loan.

Allowing customers to know more on what every bank offers is critical to grow and strengthen the national economy, the development of the country and also foster a competition among local banks.

It must be noted that currently there has been an increase of lending rate, this happens because the Central Bank of Paraguay (BCP) has increased the policy rate in three consecutive occasions.  Such a rate increase means an expensive credit.

In Paraguay many families always aspire to be home owners and a large percentage of them may accomplish their dream by applying for loans account provided by major banks established in Asuncion.  The home loans offered by banks range from G. 20 million (guaranies – local currency) to approximately G. 500 million, with rates that vary from 9.9 to 16%, this is always referring to housing loans.

The Regional Bank (Banco Regional, S.A.E.C.A.), one of the prestigious banks of Paraguay, is the entity to be known for having a lower interest rate in the market for this types of loans, it is offering plans that enable the acquisition of home ownership, with 9.9% rate, with credits to G 500 million with a maximum term of 20 years.  This amount is funded through the support of Financial Development Agency (Agencia Financiera de Desarrollo – AFD) that is responsible for making loans to banks in order to obtaining loans at preferential rates.

There are also other banks such as: the Family Bank (Banco Familiar); Atlas Bank (Banco Atlas), both entities have an interest rate of 10%, while BBVA bank has an interest rate of 11%.  Banco Familiar offers credits of up to G. 200 million within a payment plan of 20 years. Meanwhile, the Banco Atlas handles a rate of 10% for loans ranging from G. 100-200,000.000 AFD funds and 11.25% for those exceeding this amount which will also be paid within a maximum of 20 years.

In the case of Banco Itaú, they operate the home financing rates from 10.9% to G. 500 million from the AFD funds, and for loans that reach higher amount they offer a rate of equity at 13.9%, both plans are on a 20 years time frame. On the other hand, another bank, Bancop does not offer loans for home building, but only loans to expand and remodel houses. They have a rate of 11% for credits up to G. 500 million with a time span of 20 years. At the same time Banco Sudameris offers a credit rate of 11.25 % and Banco Continental offers rates of 12% for 20 years.

The rates of Amambay bank are up to 12.25% with a credit amount of up to G. 200 million, while for those below this amount rates are at 11.25%. Meanwhile, the Banco Itapúa offers credits for housing construction, with a rate of 12.5%. Finally, there is Visión Banco, which offers the highest rate in the market, it is 16%, with credits ranging from G. 20 million to 500 million with a term of 15 years.

All these data were compiled by the Department of Research and Economic Analysis of the daily Paraguayan newspaper Diario 5 Days. The documents required to secure a loan are: the completion of an affidavit of declaration of assets, debts and income and certificate that assures that there is no property  built with the clients name. Loans for housing sector reached about US$ 314 million, representing only 3% of the total amount of loans extended by the national banking sector.

Translated from Spanish: Peter Tase

Source of the Photo: Diario 5 Dias, Paraguay

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