The deterioration of the country’s fiscal situation is not only making public debt more expensive, which remains at record levels and rates, but is also is raising the cost of mortgage loans that allow Colombians to purchase their own home.
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Home sales. Photo:iStock
The rates that people can access to pay for their apartments or houses have been increasing for months as the cost of debt grows, and this It already stands on average at around 13 percent, a figure above the 11 percent seen just a year ago.
And, although mortgage rates moved in 2023 and 2024 following the downward behavior that the intervention interest rate of the Bank of the Republic was registering at that time, since the end of that year they began to increase rapidly at the same time as the 10-year public debt, which is already close to 15 percent.
This is stated in a report from the Bank of the Republic, which indicates that The interest rate on housing loans today responds more to the public debt than to the decisions of the Issuer itself, in contrast to what happened years ago.
“Both the interest rate on public debt and that on housing loans showed significant increases throughout 2025, long before the Bank’s intervention rate was increased. In fact, the pronounced increase in this rate in 2026 did not seem to have had any effect on the rate of home acquisition, which continued to closely follow that of the 10-year public debt,” it can be read.
Given this, the Colombian Chamber of Construction (Camacol) explains that housing is financed for terms greater than 15 years, so mortgage rates are much more associated with the cost of long-term funding than with the short-term rates of the Bank of the Republic, which today are at 11.25 percent.
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Mortgage credit. Photo:iStock
In fact, their analyzes also show that recently the mortgage rate has been more influenced by the behavior of public debt bonds (TES) than by the intervention rate. “In 2025, for example, While the Issuer’s rate was reduced, that of the 10-year TES increased more than 100 basis points and that ended up being transferred to mortgage loans by 138 basis points.“, indicate from the union led by Guillermo Herrera.
The problem is that today Colombia faces one of the highest debt rates in the world in 10-year bonds. due to the country’s fiscal situation, with a primary deficit that reached 3.5 percent of gross domestic product (GDP) in 2025, the highest level in the last three decades in the absence of an economic crisis. In addition to this, public debt continues to increase to significant levels of more than 1,215 trillion pesos and, if current pressures continue, experts such as those from the Anif economic study center predict that it could follow an unsustainable path for the economy.
As investors see more and more risks, the market is demanding a higher premium to lend to the Colombian government, which increases the cost of debt. An example of this was seen a few weeks ago when the Ministry of Finance placed 6 billion pesos in the local market in an auction of public bonds at a rate of almost 15 percent, which all Colombians will end up paying in advance through higher interest.
“The TES are a fundamental reference for the interest rates of the economy. When the Government has to pay figures close to 15 percent to finance itself, the cost of money increases for all economic agents. Furthermore, Banks compare the profitability of lending to households and companies versus investing in public debt. If TES offer very high returns, mortgage loans must offer higher rates to remain attractive“explains Luis Fernando Mejía, former director of Fedesarrollo and CEO of the consulting firm Lumen Economic Intelligence.
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For Mejía, the result of these higher public debt rates is that Families end up facing more expensive mortgage loans, lower financing amounts and greater difficulties in accessing housing. “The fiscal deterioration ends up directly affecting consumers,” he says.
Are they no longer attractive?
Precisely, the report from the Bank of the Republic explains that when the rate of public debt exceeds that of housing loans, debtors who want to acquire their own home have to pay the financial system at least that amount (today already at 15 percent) so that it continues to be attractive to banks to invest resources in these loans instead of putting them in public debt securities.
Reference image. Photo:iStock
“Investors have different alternatives in which to deposit their resources and they can effectively put them in 10-year public debt securities or a mortgage loan. It is about two different assets that compete with each other with different risks, in such a way that the public debt curve ends up being the reference and, in general, the minimum level at which credits are granted,” highlights Camilo Pérez, director of Economic Research at Banco de Bogotá.
According to the expert, this situation means that, although apparently the mortgage loan seems safer, being immersed within the Colombian economy itself, it is the Government that defines the country risk. “It may be the case that financial entities consider that lending to Colombian households may be less risky, but it is a bit atypical because, at the end of the day, these households are within the Colombian economy,” he indicated.
In that sense, the president of BBVA Colombia, Mario Pardo, told the media a few weeks ago that mortgage loan rates are actually also rising due to other factors, such as the country’s higher borrowing cost.
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“The banks They are financed at a higher cost than in Colombia. With a greater fiscal deficit, it costs more to fund you and the loans cost more, and this ends up being passed on to all Colombians. You need to have an additional differential of between 100 and 200 basis points,” said the manager.
From Camacol they indicated that the TES represent an opportunity cost for the financial system between investing in public debt or financing housing.
“When the Government ends up paying such high rates to finance itself, mortgage credit inevitably becomes more expensive for Colombian households. This ends up directly affecting the purchasing capacity of families, makes access to housing difficult and slows down the recovery of the building sector. In other words, The country’s fiscal crisis is also affecting the pockets of households that want to buy a home.“, they point out.
Mortgage credit. Photo:iStock
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Higher rates are affecting sales. Between January and April of this year, These have registered a drop of 5.9 percent. However, this is not the only factor that is currently impacting the market.
According to Camacol, this decrease has also been marked by an environment of regulatory instability and the increase in construction costs. due to the 23 percent increase in the minimum wage and the imposition of tariffs on strategic inputs such as steel. In addition to this, there are the changes to the Mi Casa Ya program, which since 2015 allowed more than 360,000 households to access housing and which have significantly reduced opportunities for households.
