Paper
Microfinance for Housing: Lessons from Practitioners
Can microfinance work for housing finance?
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23 pages
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.
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