The difference in interest rates between loans in the U.S. and Mexico

If you've ever looked into obtaining financing for a home in Mexico, you will notice that the interest rates for home loans are slightly higher than in the U.S.. There are a few reasons behind this.

The primary reason that the interest rates are higher for loans in Mexico is that there has been no competition in the secondary mortgage markets in order or in the capital markets to purchase these loans.

Financing in Mexico for U.S. citizens began in 2005, when GE Money introduced its "Mexican Dream Mortgage" product. The product was created out of a growing need to provide financing for baby boomers who where looking to buy property abroad.

Since the product is still in its infancy, the market is still changing. Once the loans become more more marketable in the secondary mortgage markets, financial analysts say we will see a drop in interest rates, making them comparable to the rates we would see in the U.S.

It is only a matter of time before we see this happen, as GE Money expects dollar mortgages to surge in 2008.