Washington, D.C., June 8, 2010
—Housing finance is prospering in emerging markets despite the economic slowdown and the mortgage crisis in many developed economies, finds a team working on housing finance at the World Bank Group.
The team recently wrapped up the 4
th
World Bank Group Global Housing Finance Conference, where participants concluded that access to housing finance will be critical in the coming years as the world population grows and countries become increasingly urbanized. Lessons from the crisis will impact the way finance for housing is provided in every country, but its development remains critical and access to housing finance continues to be a challenge for all emerging economies.
“The existing housing stock and urban infrastructure is already coming under severe pressure, resulting in the spread of slums and damage to economic growth,” said Loïc Chiquier, Manager of the World Bank’s Non-Bank Financial Institutions Group. “Substantial investment will be required in the coming years just to keep up with growing demand.”
India, for example, expects to have 590 million people living in cities by 2030, twice the current population of the United States. The World Bank Group has multiple projects in India and around the world working to address these needs. In India, the concept of “mini-mortgages” has been introduced where products are offered to low and lower-middle income borrowers who are creditworthy but do not have access to housing finance due, for example, to undocumented or irregular income. The objective is to expand financial access in a prudent manner, without exposing the financial institutions to unnecessary risk.
The World Bank Group is active in this area in more than 25 countries including Armenia, Brazil, Egypt, India, Mexico, Morocco, and Tanzania. For example, a recent project focusing on affordable mortgages in Palestine, as part of a $500 million program to help an estimated 30,000 low- and middle-income Palestinians obtain affordable home loans. Both IFC and the World Bank will provide advisory services. Another Bank loan of $300 million will finance mortgage related subsidies for lower-income home-owners in Egypt.
“Mobilizing finance for housing remains as crucial as ever,” said Janamitra Devan, World Bank Group Vice President and Head of Network, Financial and Private Sector Development. “Without increased levels of investment in housing, some of the gains achieved over the past 15 years could be reversed.”
About the World Bank Group
The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which together form the World Bank; the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world. For more information, please visit
www.worldbank.org
,
www.miga.org
, and
www.ifc.org
.
