Latin America Housing Finance

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1990s

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

Summary

Privatization & Decentralization.

Private housing mortgage systems emerge as the region undergoes neo-liberal reforms and begins to open markets. Central governments decentralize the authority to plan finance housing.

Influences

Neo-liberal reforms result in gradual economic recovery.
Pension system reforms generate resources for housing.
Land tenure rights are championed b Hernando de Soto in Peru.
Dollarization and foreign exchange risk impact the formal and informal economy.

Policies and Programs

Mexico and other countries use dual index mortgages to protect against inflation.
In Chile, supply side subsidies are used to stimulate private sector investment. Housing programs are decentralized.
Argentina boosts the National Housing Fund with fuel taxes.
Colombia establishes policies of direct financial and technical subsidies.
Costa Rica changes the "Bono Familiar" to a direct, non-refundable subsidy.

Institutional Roles

After they are hit with financial shocks, housing institutions merge with other financial institutions.
The Inter-American Savings and Loan Bank (BIAPE) is founded for Venezuela.
In Colombia, local governments facilitate access to land.
The Central Bank of Honduras establishes an internal secondary mortgage bank.
Brazil creates the Real Estate Financing System in 1997.
Guatemala creates the Fund for Housing to focus on the very poor.
Panama develops the "Plan Metropolitano" and creates the Fund for Housing Savings in 1991.

Methods, Tools, and Practices

Currency indexing is employed to address macroeconomic instability and reduce dependence on the U.S. dollar.
Rental programs support housing suppliers.
Peru creates the "MIVIVIENDA" fund in 1998 to develop housing.
The Dominican Republic allows NGOs and other intermediary financiers to issue bonds for housing improvement and reconstruction.

Lessons and Outcomes

Starting in the late 1990s, Colombia experiences an economic and housing finance crisis.
In Brazil, direct public construction of housing fails due to mismanagement.
Business loans are used for home improvements.
Argentina turns the National Mortgage Bank into a wholesale credit institution; the bank reestablishes a mortgage system destroyed by hyperinflation.
Private financial institutions step in to redevelop the housing market in Peru after hyperinflation and economic difficulties in the 1980s.