Mortgage Loans Prices Reach Maximum Levels in History

As the construction sector faces a difficult period as material costs increase, house buyers are also being impacted by high loan prices. According to BBVA, the average mortgage loan ticket is now at over MX$2 million (US$111,000), a historic figure. 

The BBVA’s housing report notes that the national GDP grew by 3.1% in 2022, which was better than expected. However, the construction sector did not experience the same improvement since its GDP only grew by 0.4% during the same period, despite the strong push for civil works through increased public investment in energy and transportation infrastructure. Additionally, the pace of input prices for this sector began to slow down toward the end of the year, with the latest official data indicating that this price index is growing at a rate below 10%. Due to the slow progress of this economic activity in 2022, a recovery in terms of reaching the level of GDP seen in 2018 will be delayed.

The report said that factors such as inflation and material cost increases negatively impacted housing prices and, as consequence, mortgage loan prices, which for the first time in the history of Mexico reached an average of MX$2 million (US$111,000) in 2022, which represents an increase of 5.8% in real terms. 

These figures confirm the increasing demand for housing in mid and high-end segments, according to BBVA. The report highlights that these trends are present in over 10 states and that there is an even double-digit appreciation of properties in 14 states. “We observe a double-digit appreciation in 14 federal entities, particularly in those located in tourist areas, where there is an expansion of the labor market with higher income, such as Quintana Roo, Baja California Sur, Nayarit, Sinaloa and Guerrero. The appreciation rates range from 14.7% to 12.3% annually,” the report reads. 

According to the report, the three main metropolitan areas have appreciation rates closer to the national average, which is 8.9%: 10% in Jalisco, 9.4% in Nuevo Leon and 8.3% in Mexico City. However, the report stresses that these three entities have higher average prices. In the case of the State of Mexico, despite the increase in the number of mortgage transactions and the reactivation of previously considered consolidated areas with little movement, the appreciation rate stood at 6.1%, which is far from the national average.