Mobilizing Long Term Resources for Housing Finance: Trials, Errors and Achievements in LAC
The World Bank
Download Document| Date Published | 2012 |
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| Primary Author | Olivier Hassler |
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Abstract
For housing finance, long term capital is of the essence. Building or purchasing a home is the major investment for most households, representing typically 4 to 5 times their annual income. In the absence of pre-existing wealth, they would have to wait for 40 or 50 years if they had to solely rely on their individual savings. Borrowing resources is therefore necessary to own a home. Given the size of the investment, their repayment must be spread out on a long period to be compatible with the annual savings capacity. Because of these long maturities, the providers of resources – banks or investors will 1) require special security, and 2) be concerned by maintaining the value of the intermediation margin or the capital lent respectively.