Panama Expands Preferential Mortgage Law to Boost Middle-Class Homeownership

Panama City, September 2025 – President José Raúl Mulino has signed Law 481, a reform that expands Panama’s preferential mortgage interest regime, aiming to stimulate the real estate sector and make homeownership more accessible for middle-class families.

What the New Law Includes

Starting in January 2026, the subsidy will apply to homes valued between $80,000 and $120,000, with buyers benefiting from a maximum interest rate of 4% for up to 7 years.

This represents two key changes:

• Extended coverage: The subsidy period is expanded from 5 to 7 years.

• Wider economic reach: More families purchasing mid-range homes now qualify.

According to Minister of Housing Jaime Jované, the reform not only provides relief over a longer term but also expands the economic scope of the program, allowing more households to take advantage of lower mortgage rates.

Background of the Reform

Law 481 updates Law 468 of 2025, which itself had replaced the long-standing Law 3 of 1985. Over the years, Panama’s preferential interest regime has been one of the government’s strongest tools to encourage homeownership, stimulate construction, and drive economic growth.

By broadening the benefits to the $80,000–$120,000 price bracket, the measure is expected to energize demand for mid-level housing, a key segment for young professionals and growing families.

Impact on Real Estate and the Economy

The government anticipates that the reform will:

• Increase home purchases across the country.

• Provide stronger incentives for developers to focus on affordable yet high-quality projects.

• Strengthen Panama’s construction sector, one of the country’s largest economic drivers.

For the middle class, this represents a meaningful step toward greater access to dignified housing—a goal that has long been a challenge given rising property prices.

The Big Question

While the reform is welcomed by many, the key question remains:
Will this new law truly make housing more accessible for Panama’s middle class, or will rising construction costs offset the benefits?