Panamanian homeowners with subsidized mortgage loans will see higher monthly payments starting this November. The Superintendency of Banks of Panama officially increased the benchmark mortgage interest rate for the final quarter of 2025, a move that directly impacts preferential housing loans across the banking system.
This adjustment raises the key reference rate from 6.25 percent to 6.50 percent, representing an increase of twenty-five basis points. Financial institutions including Banco General, Multibank, and Global Bank have already begun notifying customers about the change. The new rate took effect October 1, with banks implementing the adjustment throughout October and November.
Regulatory Announcement and Immediate Impact
The Superintendency of Banks of Panama had previously indicated this potential increase in its banking activity report. In that document, the regulator explicitly warned borrowers about the coming changes to their monthly payments.
“It should be noted that for the last quarter of the year 2025 the mortgage reference rate has increased, a situation that could impact the monthly installments of preferential interest mortgage loans,” announced the regulator in the banking activity report. [Translated from Spanish]
This benchmark rate serves as the foundation for adjusting all housing loans and other mortgage products within Panama’s financial system. It had remained stable at 6.25 percent since the beginning of 2025 through the third quarter. Now the fourth-quarter adjustment means borrowers will pay more each month or face extended loan terms.
Borrowers Receive Notification from Banks
Some customers contacted by La Prensa newspaper confirmed they have already received formal notifications from their financial institutions. One banking circular obtained by reporters detailed the specific changes facing borrowers.
“We have been informed by the Superintendency of Banks of Panama of an increase in the market reference rate for preferential mortgage loans. This has increased from 6.25% to 6.50% for the fourth quarter of the year, which begins as of October 1, 2025. By virtue of the above, and in compliance with the Preferential Interest Law No. 3 of May 20, 1985 and all its modifications, the rate of your mortgage loan will be adjusted by 25 basis points (0.25%) as of November 27, 2025,” stated one banking circular. [Translated from Spanish]
The practical effect becomes clear through specific examples. Consider a borrower who previously had a preferential interest rate of 2.25 percent. With the benchmark increase, their rate will now rise to 2.50 percent. Their monthly payment would increase from $401.52 to $421.58. Additionally, the maturity date for their debt would be extended further into the future.
These customers benefit from Panama’s preferential interest system, meaning they do not pay the full benchmark rate. Instead, they receive a substantial subsidy that brings their actual payment obligation down to the preferential level.
Payment Structure and Long-Term Consequences
Some borrowers have attempted to negotiate with their banks to maintain their current monthly payment amount despite the rate increase. This option comes with significant long-term costs. Keeping the payment unchanged requires extending the loan’s maturity date, potentially adding years to the repayment period and increasing the total interest paid over the life of the loan.
Panama’s preferential mortgage system features different rate tiers based on geographic location and property value. The country divides into two regions with separate subsidy structures. Region 1 covers Panama and Panama Oeste, while Region 2 includes Colon and the rest of the country. Both regions set a maximum home price of $120,000 for eligibility.
Within these regions, the system establishes three price tiers with corresponding subsidized rates. Lower-priced homes qualify for higher subsidy levels and longer benefit periods. The state subsidizes up to 85 percent of the interest rate that banks apply. This benefit applies exclusively to the purchase of new homes intended as primary residences, specifically excluding second homes, commercial properties, or vacation houses.
The subsidy cannot be renewed, and each qualified borrower may receive this benefit only once in their lifetime. This structure aims to promote homeownership among first-time buyers while stimulating construction of new housing inventory. The current rate increase represents the first adjustment to the benchmark in 2025, potentially signaling shifting conditions in Panama’s broader financial landscape. As banks continue implementing the new rates throughout November, thousands of homeowners will need to adjust their household budgets to accommodate higher housing costs.
Looking for properties in Panama? Contact Expat-Tations Real-Estate !