Developing Housing Microfinance Products in Central America
Can microfinance institutions provide good housing finance products?
ACCION assists several of its affiliates and partners to develop housing microfinance products. This paper reports on the pilots in the following ACCION affiliates in Central America:
- FAMA in Nicaragua;
- Integral in El Salvador.
The key lessons emerging from these pilots on housing microfinance are:
- Housing microfinance is a more appropriate than traditional mortgage lending for serving the housing finance needs of micro entrepreneurs;
- Housing microfinance program can be integrated into an MFI's existing micro enterprise finance operations;
- MFI's existing loan officers can be trained to offer housing loans without negatively affecting their productivity;
- Construction assistance component of a MFI's housing loan product should be customized to the unique situation of each borrower.
The paper concludes that well designed housing microfinance portfolios can achieve a scale comparable to existing micro enterprise finance portfolios.
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