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Housing Finance in Mexico: Current State and Future Sustainability

Author

Listed:
  • Marco Lopez-Silva
  • Raul Abreu-Lastra
  • Alberto Saracho-Martinez
  • Agustin Paulin-Hutmacher

Abstract

In 2001, Mexico introduced a comprehensive federal housing policy package. The results have been quantitatively impressive; however, there are qualitative concerns. It is also uncertain whether current subsidy programs have negative financial implications for participating mortgage issuers, as poorer applicants with lower job stability are injected into the pool of borrowers. This paper addresses that question by analyzing a large database provided by INFONAVIT, Mexico’s principal mortgage issuer, which contains information on borrowers’ repayment behavior. It is found that borrowers who received subsidies do not show higher default rates than borrowers who received no financial assistance. Borrowers receiving subsidies actually take longer to show their first default than borrowers not receiving subsidies. Therefore, current subsidy programs do not seem to have negative financial implications for participating mortgage institutions.

Suggested Citation

  • Marco Lopez-Silva & Raul Abreu-Lastra & Alberto Saracho-Martinez & Agustin Paulin-Hutmacher, 2011. "Housing Finance in Mexico: Current State and Future Sustainability," Research Department Publications 4749, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:4749
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    File URL: http://www.iadb.org/research/pub_hits.cfm?pub_id=36538394
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    References listed on IDEAS

    as
    1. Luisa Zanforlin & Marco A Espinosa-Vega, 2008. "Housing Finance and Mortgage-Backed Securities in Mexico," IMF Working Papers 08/105, International Monetary Fund.
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    More about this item

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • H81 - Public Economics - - Miscellaneous Issues - - - Governmental Loans; Loan Guarantees; Credits; Grants; Bailouts
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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