Microfinance for Housing: Lessons from Practitioners

This presentation explores the avenues for microfinance in housing finance. The presentation:

• Explores housing microfinance from the dual perspective of:
  • Housing finance;
  • Microfinance.
• Identifies policy and business-development approaches.

From the housing perspective, the presentation assesses that:

• Traditional mortgage finance is poorly suited for the low/moderate-income majority;
• Housing microfinance fits the progressive housing process used by the majority of households in emerging countries;
• Housing microfinance is more suited to lower/moderate income households, especially in cases of informal incomes and para-legal tenure.

From the microfinance perspective, the document states that:

• There are successful results from microfinance markets, such as Bolivian microfinance markets;
• Micro credit technologies have worked on an efficient and profitable basis;
• There is a need for greater scale and product diversification.

Further, the document:

• Identifies challenges facing microfinance;
• Assesses the potential demand of housing microfinance;
• Inspects the existence of appropriate credit supply for housing finance for low/moderate income households;
• Presents keys for microenterprise lenders to diversify into housing microfinance.

Finally, the presentation suggests the following to boost housing microfinance:

• Communication and cross-fertilization between the housing finance and microfinance communities;
• Donor and government recognition and support;
• Offering of credit first, and complementing it with a small up-front government subsidy;
• Disseminating solutions to key challenges.