Fitch Ratings: Colombian Home Prices Will Continue Continue to Rise in 2024 but Mortgage Rates Will Come Down

Largely as a result of low inventory, home prices in both Latin America and North America will continue to rise next year — but will be tempered by softer demand from elevated mortgage rates, according to a recent report from Fitch Ratings.

Photo credit: Loren Moss

“Slowing inflation in Brazil, Colombia and Mexico will lead to mortgage rates falling slightly over the next two years as monetary policy eases, although overall home price growth will constrain affordability,” stated Fitch Ratings this month in its 2024 Global Housing and Mortgage Outlook. “Annual nominal Brazil home price growth of 4%-6% in 2024 is in line with our 5.5% estimate for 2023. Mexican home price growth is expected to decelerate from our 2023 forecast of 9.3% to 6%-8% in 2024. Fitch forecasts slower Colombian home price growth of 5%-7% in 2024 from 12% in 2023.”

The New York-based ratings agency projects mortgage arrears in 2024 to be 2%-4% in Colombia, which would be consistent with 2023 levels, and “driven by mildly improving macroeconomic environment and stable unemployment.” In Brazil and Mexico, it is projecting 1.75%-2.25%, and 2.5%-3.5%, respectively, for similar reasons.

In both Latin America and North America, Fitch cites a “larger-than-expected economic contraction and a related rise in unemployment” as a downside risk to its forecast

“We are forecasting nominal U.S. home price increases of 0%-3% in 2024, the lowest yearly home price increase since 2019. Sustained housing demand in Canada will drive home prices increases of 3%-5% in 2024, although this is down from 7% in 2023,” stated Fitch.”

“U.S. mortgage arrears will rise to 2%-2.2% from their low 2023 levels of 1.4% due to deteriorating economic conditions and rising unemployment,” the agency added. “Most U.S. borrowers will not be affected by high rates due to the prevalence of 30-year, fixed-rate loans. We expect a modest increase in Canadian mortgage arrears to 0.25%-0.3% from a record low of 0.15% in 2023 given high interest rates and a stagnating economy.”