Housing Microfinance: Some Trends in Housing Finance

This presentation discusses the various features and trends in the development of housing microfinance. It presents an overview of the following vis a vis housing finance:

• Status in emerging economies:
  • Housing finance has had recognizable social impacts and has become a high priority for many governments;
  • There is a need for market based integration of housing finance through the financial sector, regulation of credit, market risks, path-dependent processes, and multiple products.
• Reforms with an emphasis on:
  • Long term macro-stability;
  • Land security and title registration;
  • Competition and innovation through the private sector;
  • Different roles of the state;
  • Smarter housing loan subsidies;
  • Proper risk management and funding tools;
  • Credits adapted to market realities.
• Mortgage securities: slow development but promising evolution;
• Different savings products with an emphasis on:
  • Creation of a down payment and favorable credit score for low-income groups;
  • Various models that link savings and credit for housing investment;
  • Different forms and degrees of state support.
• Mortgage credit insurance systems for lenders with an emphasis on:
  • Improved credit affordability;
  • Functional reallocation of risks;
  • Useful external enhancement for mortgage securities;
  • Evasion of full coverage;
  • Actuarial pricing, reserves and insurance regulations;
  • Possible initial state sponsorship.

The presentation concludes by discussing the relation between microfinance and housing, and argues that although the connection is new; the results are encouraging, showing improved accessibility, portfolio performance, and yields.