Housing Finance in Mexico: Current State and Future Sustainability

Marco Lopez-Silva, Raul Abreu-Lastra, Alberto Saracho-Martinez and Agustin Paulin-Hutmacher

No 4749, Research Department Publications from Inter-American Development Bank, Research Department

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.

JEL-codes: G18 G21 G28 H81 R31 R38 R51 (search for similar items in EconPapers)
Date: 2011-11
New Economics Papers: this item is included in nep-mac and nep-ure
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