The high interest rates that the Mexican economy is experiencing have already begun to impact the placement of credit, particularly for companies or specific products such as automobiles, BBVA Mexico said.
“We see that the automotive credit is affecting the demand, these rate levels are being affected, in general, credit for durable consumer goods is sensitive to rates; and particularly credit to companies, which are determined at short-term variable rates, particularly those for construction,” said BBVA Mexico economist Carlos Serrano.
In the presentation of the banking situation study corresponding to the first semester of 2023, the largest financial institution that operates in Mexico explained that in general terms credit in Mexico has not become more expensive in the same proportion as the reference rate of the Bank of Mexico, which is at a maximum of 11%, but it will continue to be reflected in the cost of credit.
“The banks have managed to ensure that not all rate increases are transferred to consumers, but as long as the reference rate continues to rise, there is no escape, the credit rate will continue to rise, to a lesser extent than that of Banxico, but as long as the increase continues, the cycle of increases in the credit rate will continue,” he explained.
The BBVA Mexico study detailed that after reaching its minimum level of the last eight years in 2020, the flow of financing to the private sector has increased 2.1 percentage points of the Gross domestic product (GDP) to close the third quarter of 2022 at a level of 2.7% of GDP.
Are there increases in financing to the private sector?
The recovery of financing to the private sector has been supported by the greater flow of financing to households, which, in turn, can be explained by a sustained growth in bank credit, both for consumption and for housing.
“In effect, at the end of 2022 the balance of credit to households in real terms managed to exceed its pre-pandemic level by 0.8%, the result of average annual growth in real terms of 5.3% of the consumer portfolio and 3.3% of the portfolio of housing.
According to BBVA, the relevant growth of consumer credit, which reached 9.1% per year in real terms in December 2022, has been supported by higher-than-expected growth both in real wages and formal employment, as well as in the economy’s own private consumption.
Thus, the credit card and payroll segments were the ones that contributed the most to the increase in the consumer portfolio, after an acceleration in their growth during 2022 that led them to close the year at levels of around 10% per year, once discounted inflation.
According to BBVA, these growths have coincided with reductions in real terms in credit limitswhich suggests more prudent granting conditions in an environment of higher interest rates.
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