Academic literature on the topic 'Bank mortgages'

This work examines the current world experience in assessing the sensitivity of household mortgage borrowing to interest rates. The data of the “bank— region—year” format are used to estimate supply and demand equations for housing loans issued by banks in the regions of the country in 2015—2018. Our estimations have revealed that the demand on the mortgage market in the regions is sensitive to the price of loans: when weighted average rate at which a bank issues mortgages in a region is lower by 1 percentage point it is associated with an increase in demand up to 20—25%, all other things being equal, that is, when taking into account the number of offices of a bank in that region, the economic situation and region’s characteristics in that year. Demand for mortgages is elastic at interest rates, which means that by lowering rates on mortgage programs, banks can expect an increase in demand, due both to an increase in overall demand for loans and to an overflow of borrowers from other banks. Consequently, it was confirmed that high interest rates on mortgages hinder the development of housing lending.

This study discusses the implementation of murabahah contracts on mortgage financing in the Parepare Islamic state savings bank. That the BTN Syariah bank is a unit of conventional Bank BTN which raises doubts about mortgage financing, whether or not it has implemented murabahah contracts in mortgage financing or not. As recommended by the DSN fatwa and Indonesian banks. This study aims to determine the implementation of the murabahah contract on mortgage financing at the Parepare Syariah State Savings Bank. The results of this study indicate that: (1) the financing mechanism for mortgages at Bank BTN Syariah Parepare is in accordance with the rules of banks and government, the rules governed by the government are the rules regarding subsidized mortgages stipulated in PermenPUPR Number 21 / PRT / M / 2016 concerning convenience and or assistance in obtaining houses for low income people. PermenPUPR Number 26 / PRT / M / 2016 concerning changes to the ministerial regulations on public works and public housing number 21 / PRT / M / 2016 and PermenPUPR Republic of Indonesia Number 425 / KPTS / M / 2015 concerning limits on house selling prices that can be obtained through credit or financing of prosperous home ownership. (2) Implementation of murabahah contract at BTN Syariah Parepare bank, terms and conditions are in accordance with the principle of murabahah contract, murabahah contract has not implemented well on mortgage products at BTN Syariah Parepare bank due to the existence of murabahah contract elements which are not in accordance with the fatwa of the board national sharia-MUI. The element of the murabahah contract that is not in accordance with the DSN-MUI fatwa is the down payment and rescheduling. The elements of the murabahah contract are in accordance with the DSN-MUI fatwa, namely discounts, settlement of accounts receivable, fines and accelerated repayments.

ROPAIGEALACH v. Barclays Bank plc (not yet reported) is another case that attempts to define precisely the relationship between a mortgagee's right to possession of mortgaged premises following default by the mortgagor and the court's ability to defeat or defer this right under its statutory powers. More than that, the Ropaigealach decision illuminates brightly the true extent of a mortgagee's possessory rights and may, if other mortgagees cannot resist the temptation to follow its lead, require the further intervention of Parliament to protect mortgagors of dwelling houses.

This article reassesses the causes of Chicago state bank failures during the Great Depression by tracking the evolution of their balance sheets in the 1920s. I find that all banks suffered tremendous deposit withdrawals; however banks that failed earlier in the 1930s had invested more in mortgages in the 1920s. The main problem with mortgages was their lack of liquidity, not their quality. Banks heavily engaged in mortgages did not have enough liquid assets to face the withdrawals, and failed. This article thus reasserts the importance of pre-crisis liquidity risk management in preventing bank failures.

PurposeThe purpose of this study is to investigate barriers to accessing mortgages in Nigeria’s urban housing markets with the main focus on Kaduna State. The objective was to establish the diverse factors that constitute barriers to urban households’ access to mortgages for homeownership from the perceptions of households, mortgage lenders and the Federal Mortgage Bank of Nigeria.Design/methodology/approachThe study used cross-sectional survey with triangulation of results. To enable the triangulation, three new samples were developed from 450 surveys with households and 10 completed by lenders, both in Kaduna State and one survey undertaken by the Federal Mortgage Bank of Nigeria. Data were collected with questionnaires designed on five-point Likert model. Data analysis utilized descriptive statistics and one-samplet-test. Triangulation enabled cross-validation of the results.FindingsThe barriers include low incomes and savings which constrain households’ ability to pay mortgage instalments and deposits, respectively, high interest rates, poor access to land, inability of potential borrowers to provide certificates of occupancy on their land, inadequate loanable funds and inadequate number of mortgage lending institutions.Practical implicationsThe study has the potential to provide a basis for mortgage market reforms. Mortgage market reforms should be encompassing because it requires action in some other sectors.Social implicationsThe social implication of the study is the possibility of motivating actions to deal with the diverse barriers to accessing mortgages which have constituted deterrents to households from realizing their homeownership aspirations and enjoying the benefits of homeownership and consequently contributing to inadequate housing and poor living conditions.Originality/valueThe study provides distinctive insight into Nigeria’s mortgage market by integrating the views of various stakeholders on a subject of social and economic significance. It contributes to the evidence-base around mortgage market reforms in Nigeria.

Purpose The purpose of this paper is to understand consumers’ willingness to choose Islamic mortgage products as a way to help Islamic banks tap into the Islamic mortgage sector in Malaysia. Design/methodology/approach Using the Theory of Interpersonal Behaviour as a point of departure, this study proposes a framework that examines factors influencing consumers’ willingness to choose Islamic mortgage products. A total of 282 usable surveys are obtained from customers of Islamic banks and the data were analysed using partial least squares. Findings The results indicate that affect, social factors, and facilitating conditions influence willingness to choose Islamic mortgages. Besides these factors, the added factors, namely, perceived risk and perceived financial benefit, significantly influence consumers’ willingness to choose Islamic mortgages. Research limitations/implications This study is confined to two public universities in Malaysia. Further testing of the proposed model across different population groups is necessary to determine the generalisability of this study’s findings. This study applies consumer factors such as affect, social factors, facilitating conditions, perceived risk and perceived financial benefit. Further testing on other factors is needed to expand the findings in this area. Practical implications The results could help bank managers make improved decisions about the factors which they need to effectively market Islamic mortgage products. This study provides insights and guidance for bank managers to manage Islamic mortgage products. Originality/value The main contribution of this paper is a proposed framework of consumers’ willingness to choose Islamic mortgage products which takes into account the key factors necessary to predict consumers’ demand.

AbstractThis paper describes and examines the linkage of house mortgages on residential property price growth in Indonesia by using qualitative and quantitative research methods. The qualitative research approach is used to elaborate descriptively the role of house mortgages on residential property prices. To strengthen it, this study then employs one of time series regression analyses namely autoregressive distributed lag (ARDL) model for the period of 2002Q1-2017Q4. To achieve the objective of this study, data was collected from secondary sources such as Bank for International Settlements (BIS), Bank Indonesia (BI), and Central Statistics Agency (BPS). The qualitative approach shows that under lack of land banking and public housing zones, the expansion of house mortgages affect positively residential property prices both for private and public housing. The argument has been confirmed from regression analysis by using the ARDL model. The estimation results using the ARDL model show that there is a positive and significant relationship between house mortgage on residential property price growth both in the long-run and in the short-run. Keywords: house mortgage, property residential prices, land, ARDL modelJEL Classification: C22, E51, G21 AbstrakStudi ini membahas secara deskriptif dan empiris peran pembiayaan pemilikan rumah terhadap harga properti residensial di Indonesia dengan menggunakan metode penelitian kualitatif dan kuantitatif. Pendekatan kualitatif digunakan untuk menggambarkan secara deskriptif peran pembiyaan pemilikan rumah terhadap harga properti residensial. Selanjutnya, untuk memperkuat argument tersebut, studi ini kemudian melibatkan salah satu teknik analisis regresi data runtun waktu yaitu model autoregressive distributed lag (ARDL) untuk periode 2002Q1-2017Q4. Untuk mencapai tujuan penelitian, data dikumpulkan dari beragam sumber data sekunder seperti Bank for International Settlements (BIS), Bank Indonesia (BI), dan Badan Pusat Statistik (BPS). Hasilnya, dengan menggunakan pendekatan kualitatif menunjukkan bahwa tanpa pelembagaan bank tanah dan zonasi khusus perumahan rakyat, skema pembiayaan kepemilikan rumah hanya akan melambungkan harga properti residensial. Argumen ini juga terkonfirmasi dari analisis regresi dengan menggunakan model ARDL. Hasil estimasi dengan menggunakan model ARDL menunjukkan bahwa terdapat hubungan jangka panjang antara kredit kepemilikan rumah dengan harga property residensial baik untuk jangka pendek maupun jangka panjang. Kata Kunci: Kredit pemilikan rumah, harga properti residensial, tanah, model ARDLJEL Classification: C22, E51, G21

This study aims to examine the influence of credit period and interest rates on mortgages users’ interest in PT. Panin Bank (Persero) Tbk. The method used in this research is multiple linear regression analysis using SPSS, which was processed based on the tabulated results of the observation sheet. From the analysis of the influence of credit period and interest rates on mortgages users’ interest in PT. Panin Bank (Persero) Tbk. Makassar branch, it can be concluded that the term and interest rates have a positive effect on mortgages users’ interest in the bank. The increase of the time limit will also increase the interests of customers. On the other hand, the increase of interest rates will decrease the interest of users. From these two researched variables, the most dominant variable affecting the mortgages users’ interest in PT. Panin Bank (Persero) Tbk. Makassar branch is interest rates, because interest rates have the greatest t-count compared to the t-count of credit period. Therefore, it can be proposed that one of the most dominant variables affecting the interest of the mortgages users in the bank is the interest rates.

Abstract We study political influences on private banks receiving government funds. Using spatial discontinuities associated with congressional district borders, we show that recipient banks of the 2008 Troubled Asset Relief Program (TARP) program increased mortgage and small business lending by 23–60% more in census tracts located just inside their home-representative’s district than just outside; the effect also shows up in higher loan acceptance rates, and mortgages more likely to be impaired or in default. The effect is stronger when the representative voted for TARP, is politically powerful, connected to the financial industry, and when the bank is important in the district. These findings suggest that obtaining public funds subjects firms to political influences, which affects the quantity and quality of corporate investment because of political considerations.

ABSTRACT This case uses a real mortgage company that was once the tenth largest mortgage loan originator in the U.S. The case sheds light on some important accounting issues in the mortgage bank industry and on industry-specific business risks. Students are required to read AKM's financial statements; identify business risks associated with its business practices; find red flags from the multiple-period cash flow statements; and, finally, comment on its accounting of mortgage loans held for sale, mortgage loans held for investment, and securities. This financial statement analysis case can help senior-year accounting majors or graduate-level accounting or finance students to understand related accounting standards for the mortgage industry and probable earnings misstatements at mortgage banks. It also can serve as timely reading for students who are interested in the recent credit crisis.

Dissertação de mestrado em Economia, apresentada à Faculdade de Economia da Universidade de Coimbra, sob a orientação de Hélder Sebastião.
This paper studies key factors and spillovers concerning the real estate market connection to the banking system, in four very different European countries. Nowadays, banks are strongly engaged in housing related activities, therefore changes in real estate value most probably have a non-trivial impact on bank´s profitability, either through direct investment or due to housing related loans. Using monthly data since 2000 until 2014 for four countries (France, Portugal, Sweden and United Kingdom) I found evidence that indeed the real estate is an important factor when one measures the costs and profits related to the banking system, it is also noticed that direct banking investment in this sector or massive engagement in mortgages related loans, are variables more important to control than the interest rate, for these European cases. My findings also suggest that the monetary policy in Europe should take into account this relationship between banking and the real estate market.

In my thesis I focuse on comparing the mortgages in Czech Republic in detail. In the first part I focuse on dependance of amout provided mortgages on unemployment and Gross domestic product. In another part of my thesis I focuse on various types of mortgages and the different factors for providing. In the last part I refer the differences on real examples.

The object of the Diploma thesis is the analysis of mortgage loan parameters on the Czech market, their subsequent comparison and evaluation of the most advantage variants of housing financing. The thesis also deals with the conditions of mortgage loans providing. The comprarison is made on the most significant providers of mortgage loans, who have controlled in the long term 90 % of the market. Within the Diploma thesis is compared five mortgage products offered by Hypoteční banka, a. s., Česká spořitelna, a. s., Komerční banka, a. s., Raiffeisenbank, a. s. a UniCredit Bank, a. s. For analysis was compiled form that includes parameters, basic interest rates and charges for mortgage loans. The parameters are obtained from external and internal bank materials and structured interviews with mortgage specialists. The evaluation of products is used to assess the flexibility, complexity and costs of particular product. I find Hypotéka České spořitelny to be the most comprehensive and flexible product. The lowest interest rates offer Komerční bank with Hypoteční úvěr Plus and UniCredit Bank with Hypoteční úvěr Individual, the highest interest rates has Hypoteční banka with Hypoteční úvěr do 100 %. Hypotéka Klasik offered by Raiffeisenbank is the charges most gentle, the most demanding on charges is Hypoteční úvěr do 100 % offered by Hypoteční banka. The most advantageous mortgage loan can't be unequivocally evaluated. It depends on whether the client prefers the lowest repayment or the most comprehensive and flexible product by which is possible, for example, pay the extraordinary instalment.

The main goal of this work is to analyze progression of mortgages in Czech Republic at start and process of financial crisis, from the first half of the year 2007 till now. The work contains not only the basic informations of mortgages, but it also includes the list of two sections of criteria. The first section is about, what parameters banks demand of their clients and the second one is about, what the main reasons of client are in the choosing of their required banking-house. Development of these criteria in the period of financial crisis is analyzed in the second part of the work. In this part, there are described changes during the financial crisis and comparison with other countries. At the conclusion, the work evaluates present situation at financial market, how it change during the financial crisis and view into the future.

The thesis deals with the analysis of mortgage products, their supply on the market and their development in the Czech Republic. In the introduction the mortgage loan is defined and legally defined. In the second chapter describes how mortgage loans are divided and what the current situation on the market of these products. Another section is devoted to mortgage bonds as a security that is closely related mortgage loans. In conclusion, the author decided to look for a mortgage with a macroeconomic perspective. Work includes several tables and graphs, on which issues more clearly described. The annex contains an application for a mortgage loan, announcement of Wüstenrot hypoteční banka a. s. about the issue of mortgage bonds and the method of calculating tested hypotheses.

This thesis is focused on the evaluation of suitable alternatives for funding of own housing for specific model examples of clients and purposes. In the theoretical part there are defined the concepts associated with mortgages and building savings. The theoretical part is focused on the current trend in the market of mortgage financing in the Czech Republic. It also contains a prediction of further developments in the field of loan financing. In the practical part the theory is used for analyzing the offers of financial institutions and there is also selected an appropriate way of financing.

This work provides a detailed research on the present condition of the residential realty market and possibilities of housing financing. Explanation of basic terms on the major fields of housing financing is covered in the theoretical part. The practical part is focused on analysis of the present condition connected with the above mentioned topic. In addition, a model situation of housing financing is included in the thesis. Both the lease and the purchase of housing are compared.

Master thesis focuses on selected real estate with mortgages. Opinions on displaying processes for buying a property for a mortgage loan in the created graphic process of the Czech Banking Association. Explaining legislation on mortgage banks or building societies.

In Turkish bank practice a great variety of bank credits are extended. Banks take or convey by mortgage such as real security or surety as personal guarantee to secure loans. In the surety regulated in the Turkish Code of Obligations in essence, very strict requirements have been arranged for the purpose of protecting the guarantor. Bank credit relations are continued over a long period of time. In this process, new contracts of surety are signed or credit restructurings are in question. Here are the changes in this relation the situation of guarantor was tried to be legally disclosed in the light of Supreme Court’ s decisions.

Turkish mortgage system was established by the law number 5582 and the title of "The Law Amending the Laws Related to Housing Finance System" in 2007. Even though the entry into force of this act expressed as "Pay the rent as the landlord-performing”, no bring up short of the interest rates of a housing loan were observed. In fact, Mortgage application could not be branch out yet. The distinguishing feature of the mortgage system, mortgage collateral pools of consumer loans with guaranteed by mortgage backed securities to be issued, sold in the capital market, also called the mortgage money is the safeguard of cheap funds. Using this fund for financing provided by banks as a result of re-housing resource for the consumer to pay the cost of housing loan interest rate is relatively go into a decline. Meanwhile, after the abundance of finance in the world, the so-called subprime mortgage, loans to non-qualified borrower, triggered the world economic crisis occurred. May well be, Turkey was unimpressed the crisis because of the not being set secondary mortgage market. All the public in charge of economy has introduced prevention of packages of measures.

Housing Finance system has provided funds to households and organizations for buying their homes and premises. There are different type of housing finance systems which are applied by different countries. Housing finance systems can be more efficient, if private sector and public sector work together and harmoniously. Housing Finance system has made considerable progress in Turkey in the last 20 years. Before housing finance system was developed in Turkey, people could have bought houses by combining their retirement allowances and savings. Another method for financing their house, people could have borrowed from relatives or close friends along with their own savings. The Mass Housing Law (Law No: 2985) entered into force in 1984.The main target of the law, to find a solution of the housing problem in Turkey. Law also determines the tasks of the Housing Development Administration (TOKİ). After 2000’s Turkish Banks began to extend long term housing loans, but there was not mortgage system. Due to inadequate saving and income levels, it was not easy to use banking finance system for the low and middle income groups. In 2007, new legal regulations come into force, which is called Mortgage Law, for improving legal framework for borrowers and lenders in the primary markets and also made regulations for integrating primary mortgage market to the capital markets. In our paper, the finance methods and improvements in the housing finance in Turkey have been analyzed evaluating legal regulations and also the methods which is used by banks and other related institutions.

The global economic crisis first started in the USA in September 2008 as a widespread insolvency problem caused by mortgage debts of households that had become unpayable. The financial crisis, in turn, caused a serious recession. The economic crisis soon spread to other developed countries because their banks held assets of US banks that had become nearly worthless while exports of these countries to the USA decreased significantly. Then it spread to developing countries because direct private investments (DPIs) and financial funds flowing from developed to developing countries declined precipitously while exports of the latter to the former countries also fell down. The developed countries, however, took proper steps to ameliorate the crisis by lowering the interest rates, helping the insolvent banks financially as wel as launching public expenditure programmes. Turkey was one of the worst hit countries because she had been following wrong globalization strategies. Privatization process was corrupt while much of the DPIs went to those fields which did not yield much increase in employment or export potential. But most importantly, Turkey had raised interest rates to abnormally high levels and thereby had vastly expanded her internal and external debts. Hence, as a result of the global economic crises, Turkey suffered a significantly deep fall in her GNP growth rate and a very big increase in her unemployment rate. Though Turkey took several measures to ameliorate the balance of payments deficit and to expand total demand, hence production, the government refrained from making a stand-by agreement with the IMF in order to avoid strict discipline in her government expenditures due to first, local elections and presently, the coming parliamentary elections.

In this study, the effects of macro prudential policies on consumer loans in the recent period are examined on the basis of total loan developments and credit type. The findings of the study show that macro prudential policies are quite effective in slowing down the growth rate of total credit and consumer loans for the ultimate purpose. In addition, the overall provisioning and risk weighting regimes provided banks with a modest level of capital adequacy ratios and prevented banks from growing in risky assets. The results of some loan types indicate that credit utilization, determined by changes in interest rates, can also be limited through macro prudential policies. Regulations for credit are not final and invariable. Credit data should be followed up at regular intervals and adjusted to the most appropriate state by tightening or loosening when necessary. In order to balance the large price increases between regions and to prevent speculative movements in the housing market, it is necessary to determine speculative region criteria specific to Turkey and then apply it to prevent speculative price bubbles. It is important to analyze the effect of rapid growth of residential mortgage lending on housing prices and also on the income distribution in the middle and long term. Considering the recent low or negative rate hikes in credit card expenditures, the effects of the flexibility introduced in installment numbers in September 2016 should be monitored in the upcoming period. Restrictions should be somewhat eased if they are not sufficient.

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.