The average interest rates of the 90-day CDTs (DTFs) closely track the behavior of Banco de la República’s benchmark rate, indicating a direct and stable relationship between the two over the period analyzed. However, the interest rate on home purchase loans (mortgage rate) has followed a different path: during 2023 and 2024, this rate mirrored the benchmark rate’s downward trend, but as of year-end 2024, even as the benchmark rate continued to fall, the mortgage rate stabilized and began to rise when it was surpassed by the ten-year government yield, following closely behind.
How is the relationship between these three rates (benchmark, mortgage, and government bonds) analyzed in this blog?
First, a graphical analysis is performed to illustrate the relationship across different time periods. Regressions are then run to determine whether a strong statistical relationship exists between the rates. Both assessments demonstrate that, over the extended period under evaluation (2003-2024), the mortgage rate behavior is associated with both the benchmark rate and the government bond rate; however, in the most recent period (2025-2026), its relationship with the benchmark rate disappears, while its relationship with government yields continues.
Related Blog BanRep: The Changing Relationship Between the Benchmark Policy Rate and Mortgage Rates in Recent Times
In recent discussions about Colombia’s macroeconomic environment, the weakening relationship between Banco de la República’s (Banrep) monetary policy rate (MPR, or the benchmark policy rate) and market interest rates has received comparatively little attention...
