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GE Money on track to lend $150 million in
US-Mexico mortgages in 2007
GE Money, the
financial services arm of the General Electric Company (GE), expects to lend
about $150 million this year to U.S. residents who want mortgages to buy
residential property in Mexico, a company official said.
"We
closed (last year) with about $60 million of these loans. We are sure that this
year we will do two-and-a-half times what we did last year," said Edwin
Vega, chief executive of mortgage lender GE Money Credito Hipotecario, in an
interview this week.
GE Money
is keen to tap what it sees as a potential market worth billions of dollars
that until recently has grown with little or no mortgage financing. U.S.
citizens have been purchasing homes in Mexican resort destinations like Los
Cabos, and
retirement centers such as
Guadalajara, for decades, with home buyers paying in cash or obtaining
expensive financing from real-estate developers and niche lenders. Now
large international lenders like GE Money and Spain's
second-largest banking group Banco Bilbao Vizcaya Argentaria (BBV) want to
leverage their presence in Mexico
and the U.S.
to bring more financing to this market.
Demographics
are working in lenders' favor since about 78 million baby boomers will start
retiring in the next decade and some will probably look to Mexico, where
property prices haven't reached what some analysts have called stratospheric
levels observed in popular retirement destinations in California and Florida. The privatization
of Mexico's airport industry and the emergence of low-cost carriers in recent
years have also brought affordable air travel to new areas of the country,
especially coastal destinations that are popular with home buyers from the U.S.
"There
are a large number of people who are turning to Mexico, which they see as an
attractive place to have a vacation home, a weekend house, and a retirement
property," Vega said.
GE Money
started piloting its "Mexican Dream Mortgage" program in five
locations in late 2005, before moving to a full commercial launch the following
year. Currently, the program is available in 12 locations, including the Baja California peninsula, Cancun,
and the colonial city of San Miguel de Allende.
GE Money
offers dollar-denominated adjustable-rate mortgages and fixed-rate mortgages
for up to $1.5 million, although the average loan has been around $350,000. The
company's WMC Mortgage unit handles credit scoring and paperwork in the U.S. On the
other side of the border GE Money Credito Hipotecario originates the loans, and
GE Capital Bank provides the Mexican bank trust for foreigners who want to buy
property on the coast or near the border.
During
the first half of the year, GE Money plans to expand its product offering with
a cash-out refinancing product that will allow citizens from the U.S. who already own property in Mexico to
unlock the equity in their homes, and mortgages to buy homes under
construction. To date, GE Money has only financed finished apartments and
houses.
Mortgage
financing will also allow Mexican real-estate developers to move their
inventory faster and open up a much larger universe of potential clients.
"The developer collects his money faster and can move on to the next
project. We are accelerating the cycle," Vega said. The executive said the
cross-border mortgage market is so new that GE Money and its competitors
haven't yet started to fight over clients. "I think the way things are
right now, there is market for everyone. Something we have noticed in the
domestic market is that more players in a growing market is good for everyone.
It brings legitimacy
to the product," Vega said.
This
article is courtesy of Enrique (Henry) Saldana Mexico Mortgage Solutions Cel:
(984) 116-8528.
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