Which credits are and which are not affected by the historical rate hike

MEXICO CITY, June 23 .- The historic rise of the Bank of Mexico, which on Thursday set its reference rate at 7.75%, makes new loans and those financial products that are at variable rates more expensive. In view of this, specialists recommend not to panic and to avoid over-indebtedness and use credit responsibly.

“Other rates in the economy are going to rise, including, of course, those of loans that have not been granted or loans with variable interest rates. Given this, we must be cautious, especially with credit cards that have a variable rate because it is very certain that higher interest will be paid later, and if someone wants to take a mortgage or auto loan that are regularly at a fixed rate, this is the time because surely the Bank of Mexico will continue to raise its interest rate,” explained the chief economist of Banco Base, Gabriela Siller.

The specialist explained that in the case of companies, which regularly have variable rate loans, interest rate hedges can be taken, given that the rate used to determine the interest on these loans, the Interbank Equilibrium Interest Rate (TIIE), closely follows what happens with the Bank of Mexico’s rate. As a result, the interest that companies have to pay for financing will rise.

Thus, loans that have already been previously contracted at a fixed rate, such as mortgages and automobile loans, among others, will not have any change due to the adjustments made by the Bank of Mexico.

On the subject, the Laboratory of Analysis in Commerce, Economy and Business (LACEN), said that although the impact on credit is reduced due to the low banking penetration that exists in Mexico, in the current moments of interest rate increases, one should remain calm and avoid debts and even make a greater effort to liquidate them.

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“LACEN recommends not to panic in the face of the scenarios ahead, save and use credits only in cases that are necessary, look for fixed rates and in case of paying with credit cards pay the total on the specific date so as not to generate interest,” he highlighted.

The Association of Banks of Mexico (ABM) has recognized that credit in the country has had marginal increases as a consequence of the Bank of Mexico’s hikes; however, they explain that due to competition factors and the characteristics of each client, it is feasible to find favorable credits that reflect to a lesser extent the restrictive policy of the Bank of Mexico.