Changing a mortgage loan from a municipal or cooperative bank to a bank to lower the rate and save money may be possible. Each case deserves its study.
Do you have a mortgage loan with a cashier or a cooperative and did you realize that the interest rate is high?
Most likely, you want to improve your credit business by looking to lower the rate to save a lot of money. That is, of course, an appropriate way to see the business of buying your credit: be aware of changes in interest rates to see the possibility of transferring or buying the mortgage debt.
But it is not the only way to understand a good business. Let’s see.
The savings banks, cooperatives and financial
In the Peruvian financial system, the vast majority of mortgage loans are granted by banks. The municipal and rural savings banks, the Edpymes, credit unions and financial companies, so important in our economy, lend rarely to purchase housing.
The reason is simple.
These entities lend at higher rates and have more expensive commissions than banks. It seems that it is not a good business to acquire a mortgage loan with them. However, it can be: the boxes, for example, are quick to approve, assume high risks, and request fewer documents to approve applications. If you have a good business in your hands and little credit capacity, savings banks, credit unions, Edpymes and financial companies are a good option.
Some things for others. A good investment, receiving credit approval without much paperwork has a cost.
The next question is, why are savings banks and cooperatives more expensive?
You can give that luxury. The law allows them.
The General Law of the Financial System and the Insurance and Organic System of the Superintendence of Banking and Insurance, Law 26702, establishes all the procedures that regulate financial activity: who can lend and receive money, who regulates interest rates, who monitors or how are the control reports of banks and financial institutions.
One of the topics covered by the law and the circulars of the Central Bank of the Reserve of Peru is the so-called “lace”. That depends on whether or not you can transfer your credit to another bank.
Lace is a control tool.
Suppose you are a bank. You receive money from your clients in their bank accounts and in term deposits. Also, you lend. The Central Bank and the Superintendence of Banking and Insurance watch over you. Each month, you must send a report of your operations. One day, they notice that the number of credits has been rising. Also, the value of the credits. Afterwards, they observe that more and more your clients are in default. The same happens in other banks. The BCRP makes a decision: the lace goes up. For your bank that translates into this: you must dedicate more money to the reserve than to the loans.
It is a measure to protect the financial system.
If you keep lending a lot of money and they don’t pay you… who will? The spirit of the law is to protect savers and the flow of money in the economy.
Now, we transfer this situation to the entire financial system. Financial institutions must report their operations. According to the rhythms of the economy, the behavior of the financial system, the BCRP will move the reserve. He will raise it to close the key and lower it to allow more credits to be granted.
Do all entities report their operations to the BRCP?
Now, not all operations are taken into account to calculate the reserve requirement. There are some that should not be reported. According to their nature as a financial entity, that is, if they are banks, cooperatives or savings banks, for example, or the type of business they carry out, they will be subject or not to a reserve obligation. And this is where mortgage loans granted by banks and those granted by entities that do not report to the BCRP are differentiated.
How does this affect you?
Lace affects you. It’s that simple. It is likely that your credit is not reported to the Central Bank. Which is legal. Maybe the box or cooperative that lent you is not required to report some of the operations it performs. The problem is that banks, which have stricter policies than savings banks and cooperatives, expect a current loan to be reported.
Why? A credit granted by another entity with less rigor in the study for approval involves a high risk.
The risk that banks assume
Banks take great care of the level of risk in their businesses. They are required by law to do so. Your credit could fall into a high risk category.
In that order of ideas, is there a possibility that a bank will accept a transfer of your mortgage loan from a cooperative, cash or financial institution? Honestly, not many.
What can you do? Ask a bank for a home equity loan, which has a lower rate than what you currently pay.