Law creating preferential interest rates is boosting housing sector

This post is also available in: Spanish

Real estate in Panama has gone through a series of changes that reflects the world’s economic situation. Until five years ago there was a bonanza in the country, but now the market is more stable that it was before. However due to the mega projects that the Martinelli’s government is carrying out, such as the Metro and the road realignments projects to mention a few, the prices of construction materials have risen significantly.

The consequence of this price increases has kept properties expensive, even for lower and middle income housing. As a way to help first-time buyers, a new preferential interest rate mortgage was created by the government. The main requirement is that the property be the principal residence.

The rate is divided as follows: from $0 to $40,000 the interest is zero, because the State will pay for it and the purchaser can get a 100 percent mortgage from the bank. From $40,001 to $120,000 the government will pay two percent and the buyer covers the rest of the bank interest.

The first 15 years are guaranteed and terms shall not exceed 75 years. An advantage of this system is that under the Law of Preferential Rates, the financial institution cannot charge a closing commission.

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