|Spain's BBVA Sees Growth In Cross-Border Mortgages In 2009|
Ken Parks - Dow Jones Newswires
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Mexico City - Spain's second-largest bank Banco Bilbao Vizcaya Argentaria SA (BBV) expects its cross-border mortgage business aimed at affluent U.S. citizens and Canadians who want to buy property in Mexico to continue growing this year even amid a global economic downturn, according to a company executive.
"For 2009 we want to do 30% or 40% more (than 2008). We still don't have a hard target, but to at least have a starting point we are looking at placing $135 million," said Isidoro Sanchez, director of business development at the mortgage arm of BBVA Bancomer, in a telephone interview.
BBVA boasts a considerable presence on both sides of the U.S.-Mexican border through its control of Mexico's biggest bank, BBVA Bancomer, and the acquisition of five U.S. banks since 2004 that have given it a large footprint in the U.S. southwest and southeast.
BBVA made about $100 million in cross-border mortgages under its "Your Dream Home In Mexico" program last year, up from $65 million in 2007, the first year in which it really started to market the product in an important way, said Sanchez, who was optimistic the program could reach $500 million a year in five years.
Even so, cross-border mortgages are very much a niche market for BBVA, whose Mexican subsidiary alone had 145.35 billion pesos ($10.33 billion) in home loans on its books at the end of September.
The bank's U.S.-dollar-denominated cross-border mortgage program is aimed at prime borrowers with a FICO credit score of at least 680 and requires a minimum 20% down payment.
Last year, the average loan was for about $535,000 and the average home price was around $1 million, Sanchez said.
Retirees make up at most 10% of borrowers, while the rest are a mix of professionally active North Americans from 40 to 55 years of age looking for a weekend retreat, and semi-retired buyers between 55 and 60 who spend several months a year in Mexico.
Europeans are another set of potential vacation home buyers that BBVA is keen to tap.
"We are going to aggressively promote our product (this year), especially with Spaniards, Italians and Germans. We'll see what kind of volume we get so that in 2010 we can have a full-fledged business," Sanchez said.
Sanchez attributed the resilience of Mexico's second-home market for foreigners during a recession in the U.S. and Europe to the upper income profile of the buyers.
"It seems to me that even with the crisis, the drop in the stock markets, there were some people who had the opportunity to continue buying homes," he said.
BBVA is still seeing growth in the popular beach resorts of Los Cabos, Puerto Vallarta, Matzatlan, Cancun and the Riviera Maya, markets that enjoy a broad base of visitors who fly in from different parts of the U.S. and Europe.
Destinations along the U.S. border, namely the Rosarito, Tijuana, Ensenada corridor in Baja California, and Puerto Penasco in Sonora state, are still suffering due to their dependence on U.S. buyers from California and Arizona.
"I think the decline in the Rosarito, Tijuana, Ensenada corridor is a mix of the financial crisis in the U.S. and (border) violence. Puerto Penasco is related to the economic crisis in Arizona," Sanchez said.
BBVA Bancomer, through its Preferred Customers' Unit, is the first bank in Mexico to cater to the special needs of foreign residents and visitors, using not only the English language, but also the same financial language you are accustomed to back home. To learn more about the BBVA Bancomer Preferred Customers Unit, click HERE or visit TerraBancomer.com.