Increasing access to mortgage financing for lower-income customers in Colombia
Colombia's Credifamilia has joined the Business Call to Action (BCtA) with a commitment to expand its successful low-income loan portfolio by extending US$240 million in home mortgages to at least 20,000 households in six urban areas which will house 78,000 people by 2020. The program includes loans for 4,000 informal households who traditionally have had difficulty in accessing mortgage loans.
The company aims to address Colombia's chronic housing shortage by developing home-loan programmes that target low-income families (40 percent which are headed by women), who have limited access to traditional banking services. Credifamilia anticipates revenues from its low-income mortgage portfolio to increase five-fold to US$30 million, its staff will double to 300 and more than 15,000 construction jobs will be created over the next five years. Credifamilia is the first Colombian company to join BCtA.
A shortage of housing is a chronic problem for Colombia, and as recently in 2015, mortgage lending comprised only 5.5 percent of its GDP, one of the lowest in Latin America. The problem is particularly acute in Bogota and the country's other growing cities. It has led to overcrowding, high rent burdens, housing insecurity and deteriorating housing conditions. For this reason, Credifamilia focuses on the country's urban areas and already expanded from its home office in Bogota to the country's other largest cities Medellin, Cali, Bucaramanga, Barranquilla and Pereira.
Credifamilia devotes 40 per cent of its product portfolio to under-served households earning between one and two minimum wages (between US$8 and US$9 per day). Most of its loans are 15 years in term. The company has developed a number of dynamic methods for expanding its client base and mitigating risk. These include partnering with supermarkets and pharmacies as payment networks so clients can pay monthly installments near their homes, educating prospective home-buyers with information and technical advice on the home buying process, and individual home appraisals to ensure construction quality and fair market value. Credifamilia is also experimenting with an online sales channel, which has been popular among potential clients who feel intimidated by the traditional mortgage process.
Credifamilia's Housing Solutions