A Comparison of Housing Finance Programs for Low Income People in Peru
Housing needs and housing market potential are high in Peru. The paper focuses on a comparison of three approaches to low-income housing finance in Peru, namely, the Mivivienda and Techo Proprio programs of the government and the Micasa loan product of the MFI Mibanco. Study findings indicate that:
- Although Mivivienda was more successful than Techo Propio, neither product has successfully reached low-income markets;
- While Mivivienda was too dependent on government funding, the design of Techo Propio encouraged defaults;
- Micasa, an unsubsidized loan product developed by Mibanco, has been successful at reaching more low-income families;
- Micasa has added stability Mibancos overall portfolio, diversified portfolio risk, increased revenue, lowered administrative costs, and improved customer loyalty.
Study findings suggest that housing microfinance (HMF) should be given the freedom to develop in Peru. HMF based on progressive building fills a critical need for the non-indigent poor, and is commercially viable. Finally, HMF is particularly effective under regulatory frameworks that allow free decisions about credit methodology and loan product features and terms.