Latin America Housing Finance

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1980s

Influences | Policies and Programs | Institutional Roles | Methods, Tools, and Practices | Lessons and Outcomes

Summary

Economic Crisis & Inflation.

Mounting external debt plunges the region into an economic crisis which nearly eliminates mortgage financing in many countries. Policies and programs to protect against inflation are developed.

Influences

Economic crisis results in the "lost decade."
Inflation and hyper-inflation negatively affect long-term housing policies and plans.
Countries develop policies to protect against inflation.
Democratic regimes return to power.
Increased private sector integration and initiatives occur.
Much of Central America is embroiled in war.

Policies and Programs

Chile's Program for Basic Housing provides subsidies and authorizes municipalities to build housing.
Colombia's Urban Reform Law in 1989 gives importance to public housing and land-use regulation.
Brazil adopts "Plan Cruzado," an economic stabilization plan, and eliminates the National Housing Bank. Housing is funded by labor taxes.
Panama initiates a lasting program of housing improvement in 1981.
Peru creates the Constant Value System of Housing Finance (USPAC).

Institutional Roles

Peru creates a social mortgage system.
The National Mortgage Bank in Argentina suffers from dependence on insufficient short-term financing from other state entities.
Honduras creates a social fund for housing (FOSOVI).
Costa Rica creates the "Bono Familiar de Vivienda," a one-time grant used as an incentive to complement families' savings.
Venezuela creates a housing law in 1989.
Chile revises and simplifies the Program Basic Housing to better target subsidies.

Methods, Tools, and Practices

Argentina moves away from tall residential towers to ward compact complexes.
In Mexico, the government constructs housing directly; housing finance is based on indirect subsidies and below-market interest rates.
Mexico and Chile index for inflation.
Development fees are directed toward low-income housing in Brazil.
Housing Cooperatives emerge in Chile, Brazil, and Central America.
International Development Agencies implement shelter sector and urban development assessments.

Lessons and Outcomes

Political candidates often promise to "house the poor" but programs prove unaffordable.
Large financial crises impact the mortgage market.
Judicial institutions and land registries help resolve titling issues.
Social funds are used to build housing.