[ad_1]
The increase in investors who buy a second home for investment with mortgage debt could generate vulnerabilities for the financial system. That’s what the Central Bank (BC) said last year, and the warning appears to have taken effect, either because leveraged retail investors stopped buying homes for rent, or because issuers were more restrictive in delivering this type of credits.
“More or less a year ago, the growth of leveraged retail investors tended to slow, their demand for mortgage credit did not increase. That is a phenomenon that has tended to moderate over time, but of course we are in a stressed scenario, it does not mean that the risk does not exist, ”said BC President Mario Marcel today, when presenting the Financial Stability Report ( IEF) to banking.
Marcel referred to this topic after a question that came to him from the attendees of the videoconference organized by the Association of Banks, where it was mentioned that “other countries and authorities in developed markets have stated that an adjustment in housing prices is probable for two digits given the macroeconomic deterioration. How do you evaluate the bank’s capacity for an adjustment of this magnitude that occurs within two to three quarters, given the loan to value (LTV) of 80% recently observed for more than 50% of the deeds? ” said the question.
Marcel explained that although they have warned in previous IEFs that these leveraged retail investors could constitute a risk if economic conditions and employment deteriorated, the truth is that “the adjustments that can be estimated for housing prices in developed countries do not necessarily They will repeat here in Chile. The housing bubble in other countries was real, significant. In Chile we have had price increases, but they have been more moderate, and therefore, the adjustment that may occur does not have to be on the same scale as in developed countries, ”replied Marcel.
In any case, he said that “it is an issue that we have to monitor, where of course there are risks, but I think it would not be accepted to suppose a parallel with economies where there has been a much greater housing bubble than we have had in Chile, where we have never we have come to properly classify it as such ”.
It has been widely discussed in recent times that the BC can be allowed to purchase Treasury bonds in the secondary market, for which a constitutional reform and the organic law of the BC would be needed. This is why one of the videoconference attendees asked: “How do you see the idea that the BC could buy bonds from companies, whether they are of good or bad classification, as the Federal Reserve is currently doing?”
In this sense, Marcel replied that “we have to bear in mind that there is an important difference with respect to government bonds, because while in the case of government bonds we have a uniform situation in terms of the risk involved, in the case of There is a diversity of corporate bonds, there is a whole spectrum of risk classification of these bonds. That would require a very different type of management from the BC if it had the power to act in that market. ”
He added that it is true that “there are other countries where central banks have been acting in this market, but in general these are countries that have a much higher degree of financial support due to the issuance of global currencies, reserve currencies, etc. . So not always what other more developed countries with these characteristics do are things that we can apply in Chile ”.
He pointed out that “this is a type of faculty that to grant and exercise it would require a different analysis and different capacities than those associated with the purchase of government bonds in the secondary market, a study and a different evaluation of that situation would be required” .
[ad_2]
