Academic literature on the topic 'New Zealand Mortgage Loans'

During the 1970s and 1980s the Australian and New Zealand economies have been passing through a period of restructuring. This has had important impacts upon the housing sector, leading to rises in house and land prices, in interest rates, and therefore in the costs of house purchase. Under these conditions a new agenda of housing issues has appeared concerning the affordability of housing and the continued access of modest and lower income households to the dominant form of tenure, owner-occupation. The 1980s saw the election of Labour governments committed to action in the area of housing. However, somewhat paradoxically, both in Australia and in New Zealand the policies pursued have been those of deregulation to produce a more competitive financial market. To preserve access to housing, new mortgage schemes have been designed. Two such schemes, the Capital Loan Scheme of Victoria and New Zealand's Equity Share Scheme are evaluated in the paper to show the nature of the adopted policy-response. The article is concluded with the demonstration of the limitations of such policy-based solutions to what are macroeconomic problems which are produced by moving towards an economic and social policy shaped by market monetarism.

In recent cases English, Australian, and New Zealand courts have been called on to deal with apparently similar fact situations of a woman entering into a mortgage, guarantee or joint loan contract with respect to a husband’s, partner’s or child's business debts, placing her home at risk. Yet the results and reasoning in the cases appear to be markedly different. The question is whether the apparent differences can be resolved to yield a coherent policy approach. It will be argued, drawing on an economic-feminist perspective that the cases can be resolved in terms of the courts’ preparedness to acknowledge only limited categories of behaviour and circumstances, when measured against the paradigm of the ‘rational economic man’, as displacing the assumption that contracting increases welfare.

The paper examined if there exist any linkages between mortgage financing and housing delivery in Nigeria from periods of 2002-2021. Specifically, the paper examined the effect of Primary Mortgage Bank Loans, Federal Mortgage Bank Loans to Mortgage, Microfinance Bank loans to mortgage, and Government Allocation to Housing on housing delivery in Nigeria. Data for the study were sourced from the Central Bank of Nigeria (CBN) statistical bulletin and the National Bureau of statistics (2021) from 2002 to 2021. Meanwhile, the study adopted the OLS estimate. Various pre-estimation and diagnostic tests considered include: Heteroskedascity test, Ramsey Reset Test, and variance inflation factors/multi-collinearity test. The study reported that, Primary Mortgage Bank Loans have significant adverse effects on housing delivery. Meanwhile, Federal Mortgage Bank Loans to Mortgage improves housing delivery minimally. More so, MBLM and finance Bank loans to mortgage and Government Allocation to Housing are major contributing factor to housing delivery in Nigeria within the periods under review. Hence, the paper concludes that, both microfinance loans to mortgage institutions and government allocations to housing are major drivers of housing delivery in the periods under review. Accordingly, the paper recommends that, the primary Mortgage Bank should heighten efforts towards improving on reforms and policies that encourage the use of loans by mortgage institution for sustained growth and greater house development. More so, the federal Mortgage Bank should introduce new, flexible, and versatile loan policies suited to the prevailing conditions in the country taking into account dynamic changes in the environment. Keywords: Mortgage Financing, Housing Deliveries, Linkages.

We investigate the problem of interest rate risk transforming into default risk of adjustable-rate mortgage loans in the EU. Bank regulation is strikingly not neutral in this aspect, it explicitly favors short-duration adjustable-rate loans over long-duration fixed-rate loans in the framework of the gap management. This asymmetry in the regulation creates perverse incentives both for banks and households, which can lead to aggressive risk-taking, over-indebtedness of unhedged households, high procyclicality of mortgage markets, and increased systemic risks. We present a stress test model to quantify potential losses stemming from this specific risk from the perspective of lender institutions. We estimate the average extra capital that is needed to cover the additional risk of adjustable-rate mortgage loans in the EU to be 0.53% of the value of the total mortgage portfolio and 1.97% of the value of the adjustable-rate mortgage portfolio. We propose introducing a stress test model as a new mandatory element into banks’ risk management framework.

The large-scale proliferation of China’s new type of agricultural entities has given rise to a higher demand for funds. Farmers have insufficient effective collateral, which makes it difficult for them to obtain sufficient loans. Chinese financial institutions have developed a biological asset mortgage loan business to cope with this situation. China has not considered biological mortgages but has been using real estate and asset mortgage models with strong realizability. This innovative financial business has achieved positive results since it was attempted, but it also faces many risks. It is very important to comprehensively and accurately consider the risk factors of biological asset mortgage loans. Based on 1249 production and operation data samples of new agricultural entities in Zhejiang, Henan, and Shandong provinces, this study constructs an XGBoost model for empirical analysis and compares it with logical regression, support vector machine, and random forest algorithms to obtain the optimal model and feature importance value. According to the characteristic importance value, a biological asset mortgage loan risk assessment system with 4 primary indicators and 20 secondary indicators is established, which can effectively identify the biological asset mortgage loan risk of new agricultural entities.

AbstractFor many years now, there has been an attempt in the European Union to create a common legal framework for mortgage credit contracts and cross-border activities in the mortgage financial sector. One of the greatest challenges has been the establishment of a corresponding level of consumer protection in EU residential mortgage markets. This issue has become particularly important at the time of financial crisis. Consumers are increasingly exposed to the risk of losing their homes because of failing to fulfil, in due time, their obligations arising from mortgage loans, and thus losing confidence in the EU financial sector. Therefore, the European Union has intensified its efforts to improve consumers’ ability to inform themselves of the potential risks when entering into mortgage loans and mortgaging their real property. On 4 February 2014 the EU adopted the new rules on mortgage credits in the Mortgage Credit Directive. The main objective of the Directive is to increase the protection of consumers in EU mortgage markets from the risks of defaults and foreclosures. A higher level of protection must be ensured by consumers’ increased information capacity related to mortgage credits, as well as by developing a responsible mortgage lending practice across the EU. The Mortgage Credit Directive is also aimed at contributing to the gradual establishment of a single internal market for mortgage credits. In this chapter, the author analyses previous and current attempts by the EU to establish a uniform market of mortgage loans, and assesses the possible impact of the Mortgage Credit Directive on the protection of consumers in the market of mortgage credits and on the development of cross-border activities in the mortgage financial sector. Special emphasis is placed on the possible impact of the new EU rules on mortgages on national protection measures aimed at consumer protection at the time of financial crisis. The transposition of the Mortgage Credit Directive will undoubtedly contribute to a higher level of consumer protection when consumers enter into home loan contracts. However, the question arises whether, because of different levels of harmonisation of some rules laid down in the Directive, its implementation will actually contribute to an increase in cross-border home loans. The possibility for Member States to opt for increased consumer protection in some aspects of credit agreements when implementing the Directive, or the existence of different options for the exercise of individual rights that they may use cannot bring about an integration of mortgage credit markets.

Using intellectual property as collateral for loans is widely accepted around the world, but this is new in Vietnam despite the allowance of contemporary legal regulations. This is an opportunity for individuals and enterprises in Vietnam. However, in practice, accessing loans by mortgaging intellectual property at banks in Vietnam is challenging. The difficulties may come from the lack of detailed regulations, the challenge of valuating “intangible” intellectual property, or potential conflict resolutions. This paper examines the issue from a legal perspective and shows difficulties when mortgaging intellectual property in Vietnam.

The issues of state support of mortgage lending in Ukraine as a tool to stimulate the housing market, expand the opportunities of a wide range of citizens to meet housing needs and ensure the stable development of the national economy are considered. The fragmentation of the state housing policy and various instruments of state support for housing market participants are noted. Emphasis is placed on the significant unrealized potential of the construction sector, whose contribution to the domestic economy is three times smaller than the European average. The state and dynamics of the housing stock of Ukraine, the development of which remains highly sensitive to changes in the economy, are analysed. The problem of inaccessibility of mortgage lending for the general population is emphasized, which is mitigated both by market decisions of banks to reduce real mortgage rates and government initiatives to introduce and improve programs for affordable loans and housing. The practice of state programs in the housing market is analysed and the preservation of problems of their effective implementation is noted, including limited and instability of financing, the ambiguity of participation conditions, narrow target orientation, the inconsistency of responsibility of program participants. The peculiarities of the current mortgage lending are determined, among which the increase of new mortgage loans, the dominance of agreements on the secondary market, the limited number of mortgage lending banks, the provision of mortgage loans for a short period. New government initiatives to stimulate mortgage lending are considered, among the positive aspects of which is the priority of reducing the % of loan servicing, harmonization of relevant regulations, clarification of the procedure for participation. It is proposed to apply a systematic approach to the development of state support programs, which will be based on priorities by stimulating the growth of incomes and solvency of broad sections of citizens and the involvement of innovative developers in programs.

碩士
清雲科技大學
國際企業管理研究所
100
This study is aimed at analyzing the performance of six New Zealand and Australia funds sold in Taiwan, calculating their value at risk, and examining the impact of subprime mortgage crisis on the performance of the funds. The six funds - JF Australia (USD), Aberdeen Global Australasian Equity A2 (AUD), Parvest Equity Australia C (AUD), FF - Australia B (USD), Baring Australia A Class (USD) and the iShares MSCI Australia Index Fund - selected from Info Winner 2000 Database and TEJ Taiwan DB, are reviewed and further discussed. The average, the standard deviation, the β in the CAPM, and the Sharp Ratio are employed to compare the investment rates of return with the value at risk (VaR) for Australia and New Zealand funds before/during/after the subprime mortgage crisis in 2007. The absolute VaR- the relative VaR, the Historical Simulation, and the Monte Carlo Simulation are utilized as means of calculation. The results showed that, first, in the New Zealand and Australia markets, the maximum loss on investment

碩士
元智大學
管理碩士在職專班
101
Since 2007, Taiwan has implemented New Basel II Capital Accord. Influenced by global financial crises, soaring house prices and financial policies, banks make adjustments on mortgage loans by modifying bank credits and strategies. The study aims to investigate the impact of New Basel II Capital Accord on Bank decision of mortgage loans. Further discussions and researches of this study, based on literature reviews and data analysis, will focus on the consequences brought to regulations of mortgage loans and bank credit standards of individual banks toward mortgage loans after employing New Basel II Capital Accord.

This chapter examines the usage of reverse mortgages among mortgage borrowers, as well as applicants rejected for new mortgage credit who are age 62+. We find that 17–27 percent of actual and rejected borrowers would have qualified for a Home Equity Conversion Mortgage (HECM) reverse mortgage, or nine to 14 times the size of the actual HECM market. The existence of a large number of seniors with an existing mortgage or taking out a new mortgage with quite high loan to value ratios (LTVs) (57–65%, depending on the product) suggests that many seniors do, in fact, utilize home equity in order to fund their retirement. Yet they choose products that require monthly payments lasting decades into retirement and rising as a share of (declining) income as they age. We consider a number of possible explanations for why seniors in the US do not spend home equity and instead rely on loans with high repayments, including precautionary savings for health shocks, bequest motives, high costs of reverse mortgages, and the lack of brand name institutions in the reverse mortgage business.

The securitization process has become an essential tool that provides liquidity to firms and borrowers while opening up the breadth and depth of the capital markets to previously underserved individuals and firms. Securitized products pool illiquid, idiosyncratic assets or contracts, turn those pools into claims (bonds) with a new capital structure with differing risk-return attributes, and sell those bonds to institutional investors. Securitization began in the housing market where single-family mortgages were pooled and sold to investors as mortgage-backed securities. The securitized market has increased in size and complexity to include many other asset classes such as commercial real estate loans in commercial mortgage-backed securities, student loans, credit card debt, auto leases, equipment leases, and aircraft leases in asset-backed securities. The purpose of this chapter is to describe the participants in and the general structure of securitizations.

This chapter analyses the evolution of the mortgage loan in Spain during the present century. The economic development of Spain is described with its great connection to mortgages. The text centres on the new conditions incorporated in the loans in the years before the crisis, which were subsequently demonstrated to be unfair terms and caused serious problems for consumers and a lack of confidence in the financial sector. This provoked the reaction of legislators. This chapter studies the effectiveness of the subsequent mortgage laws in their intention to minimize the asymmetrical positions that the lender and the borrower occupy in the contractual relationship. Among the conclusions of the chapter, the authors highlight how each law is more precise but its effectiveness is lacking if the banking culture is not changed in terms of the relationship between to clients.

This chapter describes and details the wave of global real estate and vulture investment in distressed assets and loans, as the second wave of financialisation of residential property (housing), following the first wave of financial market and equity involvement in mortgage lending and securitisation from the late 1990s to 2008. It then defines and details a third wave of financialisation is evident in the post-2010 period as global institutional investors have increasingly invested in the private rental ‘build-to-rent’ sector. This third wave is a further development in the restructuring of the finance–real estate relationship through the increased role of large-scale corporate finance and global private equity funds (pension funds, hedge funds, wealth funds, shell funds, private equity) in the provision of rental residential property. It shows how housing and land is providing another important vehicle for investing the global ‘wall of money’ searching for higher returns in a context of reduced profitability and rising risk in the wider ‘real’ economy. It details how the Irish state’s strategy to overcome the global property and financial crash of 2008 and achieve the recovery of financial institutions and the wider economy was based on the sale of ‘toxic’ and ‘non-performing’ loans and associated land and property, at a considerable discount, to international ‘vulture funds’ and property investors via the National Asset Management Agency (NAMA) and domestic banks. The strategy was based on a deepening of the financialisation of the Irish housing (and wider property) system.

The economic collapse that set into motion the Great Depression of the 1930s was portended by mass mortgage defaults in the mid-1920s. To address this unprecedented housing crisis, New Deal legislation created the Federal Housing Administration (FHA) to insure mortgage loans. Without predecessors or peers and faced with a national emergency, the FHA turned to risk-rating experts in real estate valuation to craft underwriting policies that would shape the geography of the country and cement racial segregation in the United States for generations to come. Chapter 3 details how FHA officials utilized risk-rating standards that disqualified people of color from obtaining federally subsidized mortgage insurance. This institutional discrimination had the deleterious effect of essentially precluding people of color from obtaining middle-class America’s most important wealth-generating asset: the single-family home. Though others have written about the agency’s policies before, my analysis is notably the first to locate each version of the FHA’s underwriting manual, to take stock of each facet of race-based risk rating until the conclusion of the practice in 1947, and to analyze the agency’s effect on the lending industry thereafter.

Many retirees will not have enough money from conventional retirement programs to maintain their standard of living once they stop working. To help support themselves, they will need to tap their home equity, the major asset for most middle-income older households. Yet tapping home equity is difficult: most people are reluctant to downsize and, even when they do, they rarely reduce their housing expenses. Reverse mortgages are an option, but most households are put off by the enormity of the decision, the complexity of the product, and the high up-front costs. A state-wide property tax deferral program overcomes the hurdles to accessing home equity. Property tax deferral does not provide access to as much home equity as a reverse mortgage, but the offsetting advantage is that some of the house value after the repayment of the loan and interest will be available for a bequest. At the household level, the proposed program is revenue neutral: all taxes owed by a participating household are paid back, with interest sufficient to cover borrowing costs and administrative expenses. But because loans are made well in advance of repayments, the sponsor of the plan must cover start-up costs. In Massachusetts, if the state government simply borrowed money to cover the annual outlays, the state’s ratio of debt to gross state product would rise from 14 percent to 15.1 percent. The alternative is to involve the private sector. This decision would raise the costs to homeowners, but it may nevertheless be necessary in order to get a broad-based program up and running.

This chapter assesses the emergence of financial institutions that would cater to individuals and businesses, which relieved Norges Bank of some of its tasks such as providing short-term business credit and long-term mortgage loans. Both private banks and government lending institutions were established within a framework of close cooperation between government officials and private operators. At the same time as new institutions were born, the dividing lines between Norges Bank and the government’s role in financial markets became more clear. The chapter then looks at developments up to 1857, a year that was dominated by a deep crisis in Western economies. Norges Bank had established broad contact directly with international finance houses and was better equipped structurally and intellectually to cope with external crises that spilled over into the Norwegian economy.

Founded in 2007 by couple Kam and Reet Phulwani, Medsurge is among the fastest-growing family-owned pharmaceutical companies in Australia, supplying specialised life-saving medicines to healthcare professionals across Australia and New Zealand. Medsurge was born from the humble beginnings of Kam and Reet, who were motivated by their like-minded passion to help people and make a difference through medicine. Coming from a family of doctors, Kam followed in their footsteps to become a pharmacist with a goal of healing people and benefitting society. Meanwhile, Reet's entrepreneurial spirit was forged through her family background, with many family members engaged in business and technology roles. The duo initially faced challenges getting their business started while working full-time and receiving no bank loans. Today, Medsurge employs 40 staff to service 6,500 hospitals, supplying upwards of 700 medicines. This chapter explores how Kam and Reet grew their start-up into a thriving global business.

This study has examined mortgage loan usage in terms of macroeconomic figures that may affect consumer behavior and financial instruments' returns. Multi regression analysis has been accompanied by preliminary tests such as ADF, VIF, Jarque Bera, Durbin Watson and White Tests. Results indicate that there is negative significant relationship among Mortgage loan volume and gold returns, unemployment rate, real mortgage rates and CPI. Whereas, significant positive relation has been determined with price index of new houses, USD return and consumer confidence index. The most significant relationship is determined with unemployment rate and the weakest relation is with the consumer confidence index.

In Turkish bank practice a great variety of bank credits are extended. Banks take or convey by mortgage such as real security or surety as personal guarantee to secure loans. In the surety regulated in the Turkish Code of Obligations in essence, very strict requirements have been arranged for the purpose of protecting the guarantor. Bank credit relations are continued over a long period of time. In this process, new contracts of surety are signed or credit restructurings are in question. Here are the changes in this relation the situation of guarantor was tried to be legally disclosed in the light of Supreme Court’ s decisions.

Housing Finance system has provided funds to households and organizations for buying their homes and premises. There are different type of housing finance systems which are applied by different countries. Housing finance systems can be more efficient, if private sector and public sector work together and harmoniously. Housing Finance system has made considerable progress in Turkey in the last 20 years. Before housing finance system was developed in Turkey, people could have bought houses by combining their retirement allowances and savings. Another method for financing their house, people could have borrowed from relatives or close friends along with their own savings. The Mass Housing Law (Law No: 2985) entered into force in 1984.The main target of the law, to find a solution of the housing problem in Turkey. Law also determines the tasks of the Housing Development Administration (TOKİ). After 2000’s Turkish Banks began to extend long term housing loans, but there was not mortgage system. Due to inadequate saving and income levels, it was not easy to use banking finance system for the low and middle income groups. In 2007, new legal regulations come into force, which is called Mortgage Law, for improving legal framework for borrowers and lenders in the primary markets and also made regulations for integrating primary mortgage market to the capital markets. In our paper, the finance methods and improvements in the housing finance in Turkey have been analyzed evaluating legal regulations and also the methods which is used by banks and other related institutions.

The aging society faced by many countries, can have a significant impact on employment, savings, consumption, economic growth, and fiscal balance. It is promising to consider the problems of an aging society through the prism of the effective economic socialization of the older generation, which allows ones to extend the working capacity, health and well-being of pensioners. Late economic socialization is understood as a process and result of a person's re-interpretation of the economic reality, acknowledged by changes in economic mind and behavior at the retirement as a new social status (Chestyunina & Zabelina, 2019). Factors that affect the effectiveness of the late economic socialization have not been sufficiently studied. This study seeks to fill this gap by the qualitative analysis of semi-structured interviews with pensioners living in different parts of the country (in the capital and in the industrial city). 12 respondents were interviewed in Moscow and 9 respondents in Chelyabinsk. Thematic analysis was used to systematize and analyze data. Despite the difference in living standards in the capital and the region, most pensioners in both groups are satisfied with their income level. An analysis of the distribution of daily financial spending and savings goals suggests that pensioners in the capital have a wider range of life needs and opportunities than in the region. Similarities in purchasing behavior among pensioners in the center of the country and on the periphery, as well as a relatively low level of consumer activity were found. A different attitude to loans was recorded among the respondents in different parts of the country. If in the region almost 100% of the respondents view loans sharply negatively, then in Moscow there are only half of such pensioners, the rest perceive the loan as normal fact and support it as an opportunity to purchase expensive goods. Plans for the future of Moscow pensioners are more diverse and include ambitious economic goals: to get an apartment in turn, to exchange an apartment, to close a mortgage. Only a small part of the respondents in Chelyabinsk (22%) set economic goals in the future, and they are associated with the continuation of employment. In addition, some of the opinions about the future in this group are very pessimistic. Pensioners in Moscow put money at a lower place in the value system than respondents in the region, which indicates a greater satisfaction with the material needs of pensioners in the capital. Representations about an ideal life in retirement are concentrated on issues of financial independence among Moscow respondents. For the pensioners in the region, besides wealth, health and a sense of stability play an important role. The criteria for an economically successful person are more blurred and uncertain in the group of the pensioners in the capital. The results indicate a regional specificity of the late economic socialization. The prospects for investigating the identified differences in the quantitative study are discussed.

1.1 Macroeconomic summary Economic recovery has consistently outperformed the technical staff’s expectations following a steep decline in activity in the second quarter of 2020. At the same time, total and core inflation rates have fallen and remain at low levels, suggesting that a significant element of the reactivation of Colombia’s economy has been related to recovery in potential GDP. This would support the technical staff’s diagnosis of weak aggregate demand and ample excess capacity. The most recently available data on 2020 growth suggests a contraction in economic activity of 6.8%, lower than estimates from January’s Monetary Policy Report (-7.2%). High-frequency indicators suggest that economic performance was significantly more dynamic than expected in January, despite mobility restrictions and quarantine measures. This has also come amid declines in total and core inflation, the latter of which was below January projections if controlling for certain relative price changes. This suggests that the unexpected strength of recent growth contains elements of demand, and that excess capacity, while significant, could be lower than previously estimated. Nevertheless, uncertainty over the measurement of excess capacity continues to be unusually high and marked both by variations in the way different economic sectors and spending components have been affected by the pandemic, and by uneven price behavior. The size of excess capacity, and in particular the evolution of the pandemic in forthcoming quarters, constitute substantial risks to the macroeconomic forecast presented in this report. Despite the unexpected strength of the recovery, the technical staff continues to project ample excess capacity that is expected to remain on the forecast horizon, alongside core inflation that will likely remain below the target. Domestic demand remains below 2019 levels amid unusually significant uncertainty over the size of excess capacity in the economy. High national unemployment (14.6% for February 2021) reflects a loose labor market, while observed total and core inflation continue to be below 2%. Inflationary pressures from the exchange rate are expected to continue to be low, with relatively little pass-through on inflation. This would be compatible with a negative output gap. Excess productive capacity and the expectation of core inflation below the 3% target on the forecast horizon provide a basis for an expansive monetary policy posture. The technical staff’s assessment of certain shocks and their expected effects on the economy, as well as the presence of several sources of uncertainty and related assumptions about their potential macroeconomic impacts, remain a feature of this report. The coronavirus pandemic, in particular, continues to affect the public health environment, and the reopening of Colombia’s economy remains incomplete. The technical staff’s assessment is that the COVID-19 shock has affected both aggregate demand and supply, but that the impact on demand has been deeper and more persistent. Given this persistence, the central forecast accounts for a gradual tightening of the output gap in the absence of new waves of contagion, and as vaccination campaigns progress. The central forecast continues to include an expected increase of total and core inflation rates in the second quarter of 2021, alongside the lapse of the temporary price relief measures put in place in 2020. Additional COVID-19 outbreaks (of uncertain duration and intensity) represent a significant risk factor that could affect these projections. Additionally, the forecast continues to include an upward trend in sovereign risk premiums, reflected by higher levels of public debt that in the wake of the pandemic are likely to persist on the forecast horizon, even in the context of a fiscal adjustment. At the same time, the projection accounts for the shortterm effects on private domestic demand from a fiscal adjustment along the lines of the one currently being proposed by the national government. This would be compatible with a gradual recovery of private domestic demand in 2022. The size and characteristics of the fiscal adjustment that is ultimately implemented, as well as the corresponding market response, represent another source of forecast uncertainty. Newly available information offers evidence of the potential for significant changes to the macroeconomic scenario, though without altering the general diagnosis described above. The most recent data on inflation, growth, fiscal policy, and international financial conditions suggests a more dynamic economy than previously expected. However, a third wave of the pandemic has delayed the re-opening of Colombia’s economy and brought with it a deceleration in economic activity. Detailed descriptions of these considerations and subsequent changes to the macroeconomic forecast are presented below. The expected annual decline in GDP (-0.3%) in the first quarter of 2021 appears to have been less pronounced than projected in January (-4.8%). Partial closures in January to address a second wave of COVID-19 appear to have had a less significant negative impact on the economy than previously estimated. This is reflected in figures related to mobility, energy demand, industry and retail sales, foreign trade, commercial transactions from selected banks, and the national statistics agency’s (DANE) economic tracking indicator (ISE). Output is now expected to have declined annually in the first quarter by 0.3%. Private consumption likely continued to recover, registering levels somewhat above those from the previous year, while public consumption likely increased significantly. While a recovery in investment in both housing and in other buildings and structures is expected, overall investment levels in this case likely continued to be low, and gross fixed capital formation is expected to continue to show significant annual declines. Imports likely recovered to again outpace exports, though both are expected to register significant annual declines. Economic activity that outpaced projections, an increase in oil prices and other export products, and an expected increase in public spending this year account for the upward revision to the 2021 growth forecast (from 4.6% with a range between 2% and 6% in January, to 6.0% with a range between 3% and 7% in April). As a result, the output gap is expected to be smaller and to tighten more rapidly than projected in the previous report, though it is still expected to remain in negative territory on the forecast horizon. Wide forecast intervals reflect the fact that the future evolution of the COVID-19 pandemic remains a significant source of uncertainty on these projections. The delay in the recovery of economic activity as a result of the resurgence of COVID-19 in the first quarter appears to have been less significant than projected in the January report. The central forecast scenario expects this improved performance to continue in 2021 alongside increased consumer and business confidence. Low real interest rates and an active credit supply would also support this dynamic, and the overall conditions would be expected to spur a recovery in consumption and investment. Increased growth in public spending and public works based on the national government’s spending plan (Plan Financiero del Gobierno) are other factors to consider. Additionally, an expected recovery in global demand and higher projected prices for oil and coffee would further contribute to improved external revenues and would favor investment, in particular in the oil sector. Given the above, the technical staff’s 2021 growth forecast has been revised upward from 4.6% in January (range from 2% to 6%) to 6.0% in April (range from 3% to 7%). These projections account for the potential for the third wave of COVID-19 to have a larger and more persistent effect on the economy than the previous wave, while also supposing that there will not be any additional significant waves of the pandemic and that mobility restrictions will be relaxed as a result. Economic growth in 2022 is expected to be 3%, with a range between 1% and 5%. This figure would be lower than projected in the January report (3.6% with a range between 2% and 6%), due to a higher base of comparison given the upward revision to expected GDP in 2021. This forecast also takes into account the likely effects on private demand of a fiscal adjustment of the size currently being proposed by the national government, and which would come into effect in 2022. Excess in productive capacity is now expected to be lower than estimated in January but continues to be significant and affected by high levels of uncertainty, as reflected in the wide forecast intervals. The possibility of new waves of the virus (of uncertain intensity and duration) represents a significant downward risk to projected GDP growth, and is signaled by the lower limits of the ranges provided in this report. Inflation (1.51%) and inflation excluding food and regulated items (0.94%) declined in March compared to December, continuing below the 3% target. The decline in inflation in this period was below projections, explained in large part by unanticipated increases in the costs of certain foods (3.92%) and regulated items (1.52%). An increase in international food and shipping prices, increased foreign demand for beef, and specific upward pressures on perishable food supplies appear to explain a lower-than-expected deceleration in the consumer price index (CPI) for foods. An unexpected increase in regulated items prices came amid unanticipated increases in international fuel prices, on some utilities rates, and for regulated education prices. The decline in annual inflation excluding food and regulated items between December and March was in line with projections from January, though this included downward pressure from a significant reduction in telecommunications rates due to the imminent entry of a new operator. When controlling for the effects of this relative price change, inflation excluding food and regulated items exceeds levels forecast in the previous report. Within this indicator of core inflation, the CPI for goods (1.05%) accelerated due to a reversion of the effects of the VAT-free day in November, which was largely accounted for in February, and possibly by the transmission of a recent depreciation of the peso on domestic prices for certain items (electric and household appliances). For their part, services prices decelerated and showed the lowest rate of annual growth (0.89%) among the large consumer baskets in the CPI. Within the services basket, the annual change in rental prices continued to decline, while those services that continue to experience the most significant restrictions on returning to normal operations (tourism, cinemas, nightlife, etc.) continued to register significant price declines. As previously mentioned, telephone rates also fell significantly due to increased competition in the market. Total inflation is expected to continue to be affected by ample excesses in productive capacity for the remainder of 2021 and 2022, though less so than projected in January. As a result, convergence to the inflation target is now expected to be somewhat faster than estimated in the previous report, assuming the absence of significant additional outbreaks of COVID-19. The technical staff’s year-end inflation projections for 2021 and 2022 have increased, suggesting figures around 3% due largely to variation in food and regulated items prices. The projection for inflation excluding food and regulated items also increased, but remains below 3%. Price relief measures on indirect taxes implemented in 2020 are expected to lapse in the second quarter of 2021, generating a one-off effect on prices and temporarily affecting inflation excluding food and regulated items. However, indexation to low levels of past inflation, weak demand, and ample excess productive capacity are expected to keep core inflation below the target, near 2.3% at the end of 2021 (previously 2.1%). The reversion in 2021 of the effects of some price relief measures on utility rates from 2020 should lead to an increase in the CPI for regulated items in the second half of this year. Annual price changes are now expected to be higher than estimated in the January report due to an increased expected path for fuel prices and unanticipated increases in regulated education prices. The projection for the CPI for foods has increased compared to the previous report, taking into account certain factors that were not anticipated in January (a less favorable agricultural cycle, increased pressure from international prices, and transport costs). Given the above, year-end annual inflation for 2021 and 2022 is now expected to be 3% and 2.8%, respectively, which would be above projections from January (2.3% and 2,7%). For its part, expected inflation based on analyst surveys suggests year-end inflation in 2021 and 2022 of 2.8% and 3.1%, respectively. There remains significant uncertainty surrounding the inflation forecasts included in this report due to several factors: 1) the evolution of the pandemic; 2) the difficulty in evaluating the size and persistence of excess productive capacity; 3) the timing and manner in which price relief measures will lapse; and 4) the future behavior of food prices. Projected 2021 growth in foreign demand (4.4% to 5.2%) and the supposed average oil price (USD 53 to USD 61 per Brent benchmark barrel) were both revised upward. An increase in long-term international interest rates has been reflected in a depreciation of the peso and could result in relatively tighter external financial conditions for emerging market economies, including Colombia. Average growth among Colombia’s trade partners was greater than expected in the fourth quarter of 2020. This, together with a sizable fiscal stimulus approved in the United States and the onset of a massive global vaccination campaign, largely explains the projected increase in foreign demand growth in 2021. The resilience of the goods market in the face of global crisis and an expected normalization in international trade are additional factors. These considerations and the expected continuation of a gradual reduction of mobility restrictions abroad suggest that Colombia’s trade partners could grow on average by 5.2% in 2021 and around 3.4% in 2022. The improved prospects for global economic growth have led to an increase in current and expected oil prices. Production interruptions due to a heavy winter, reduced inventories, and increased supply restrictions instituted by producing countries have also contributed to the increase. Meanwhile, market forecasts and recent Federal Reserve pronouncements suggest that the benchmark interest rate in the U.S. will remain stable for the next two years. Nevertheless, a significant increase in public spending in the country has fostered expectations for greater growth and inflation, as well as increased uncertainty over the moment in which a normalization of monetary policy might begin. This has been reflected in an increase in long-term interest rates. In this context, emerging market economies in the region, including Colombia, have registered increases in sovereign risk premiums and long-term domestic interest rates, and a depreciation of local currencies against the dollar. Recent outbreaks of COVID-19 in several of these economies; limits on vaccine supply and the slow pace of immunization campaigns in some countries; a significant increase in public debt; and tensions between the United States and China, among other factors, all add to a high level of uncertainty surrounding interest rate spreads, external financing conditions, and the future performance of risk premiums. The impact that this environment could have on the exchange rate and on domestic financing conditions represent risks to the macroeconomic and monetary policy forecasts. Domestic financial conditions continue to favor recovery in economic activity. The transmission of reductions to the policy interest rate on credit rates has been significant. The banking portfolio continues to recover amid circumstances that have affected both the supply and demand for loans, and in which some credit risks have materialized. Preferential and ordinary commercial interest rates have fallen to a similar degree as the benchmark interest rate. As is generally the case, this transmission has come at a slower pace for consumer credit rates, and has been further delayed in the case of mortgage rates. Commercial credit levels stabilized above pre-pandemic levels in March, following an increase resulting from significant liquidity requirements for businesses in the second quarter of 2020. The consumer credit portfolio continued to recover and has now surpassed February 2020 levels, though overall growth in the portfolio remains low. At the same time, portfolio projections and default indicators have increased, and credit establishment earnings have come down. Despite this, credit disbursements continue to recover and solvency indicators remain well above regulatory minimums. 1.2 Monetary policy decision In its meetings in March and April the BDBR left the benchmark interest rate unchanged at 1.75%.