The National Assembly of Panama has approved in second debate to maintain the 4% subsidized interest rate on certain mortgage loans, a decision expected to benefit families and support the national economy.

Law 341, which modifies parts of the 2025 preferential interest law, initially proposed lowering the subsidized rate for homes between $80,000 and $120,000 to 3.5%. However, after debate, lawmakers agreed to keep the rate at 4% for all provinces. The subsidy will apply for seven years.

This decision is seen as a relief for the middle class, which had expressed concern about the proposed reduction. It also gives stability to the banking and construction sectors, both key drivers of Panama’s economic growth.

One of the main issues that slowed earlier reforms was the controversial Article 12, which gave banks obligations considered excessive for refinancing loans. That article has now been removed, clearing the way for financial institutions to continue supporting the program.

Currently, the government owes banks an estimated $280 to $300 million related to this subsidy, but officials emphasized that keeping the program alive is crucial for stimulating the housing sector, generating jobs, and encouraging investment.

The bill will now move to a third debate before final approval and presidential sanction. If passed, it will take effect in January 2026.

This policy matters beyond mortgages. By encouraging housing development, it boosts employment, tax revenue, and economic activity in cities like Panama City and growing regions such as Boquete.

Date: September 7, 2025