Top banker sees strong home loan demand after 2005

Panamanian banks expect to see strong growth in mortgage loans from 2005 once tax breaks for construction loans end that year, local daily El Panama America reported. The boom in construction loans should give way to home loans as developers try to fill the new buildings, banking association chairman Raul Aleman was quoted as saying. Aleman said the combination of housing demand and an oversupply of apartments could drive down interest rates on mortgage loans. "We have the lowest rates in the history of the country," he said. Loans for homes under US$20,000 carry rates as low as 3.75% while for housing over US$70,000 interest rates can be as high as 8%. For banks, home loans are a low-risk business given the requirement of a co-signer, Aleman said.