Central Bank: Real estate mortgage rates going down
Real estate mortgage rates are continuing to trend downwards.
Commercial banks' residential mortgage rates moved downward in June, the Central Bank said in its Mortgage Market Reference Rate statement yesterday.
The guideline spells out an interest rate benchmark—the MMRR—against which all residential mortgage rates are to be priced and re-priced.
It is computed by the Central Bank using the commercial banks' funding costs as well as yields on applicable treasury bonds and is announced on the first business day in March, June, September and December.
With the MMRR declining to 2.25 per cent in June from 2.5 per cent in March, the weighted average rate on new residential mortgages fell to 5.58 per cent in June from 5.91 per cent in March.
Lower mortgage rates have in part stimulated real estate mortgage demand with robust growth in real estate mortgage loans during the first half of 2013, the Bank said.
The MMRR for September will be held at 2.25 per cent
Commercial banks and their affiliated non-bank financial institutions are expected to apply this rate to all existing residential mortgage loans that are due to be re-priced as well as new mortgages from September 2, the Bank said, noting that the MMRR is not the mortgage rate that will be charged by the commercial bank.
The mortgage rate is equal to the MMRR plus a margin negotiated between the commercial bank and the customer, the Bank said.