Texas Border Business
Mexico, Mexico City – The International Finance Corporation (IFC), member of the World Bank Group, announced a loan of approximately $130 million to Fideicomiso Hipotecario (FHipo)—the country’s first Mortgage Real Estate Investment Trust— with the objective of expanding its mortgage operations to benefit more Mexican families. The financing package will also support the issuance of FHipo’s first green bond while increasing the liquidity of residential mortgage originators that work with the company.
Low and middle-income borrowers in Mexico will have increased access to housing finance with the new loan by IFC. Addressing the severe shortage of affordable housing, especially through green projects and e-mortgages, will help strengthen the Mexican mortgage market, create jobs, and accelerate economic recovery.
Mexico has a severe shortage of affordable housing, with almost nine million families lacking adequate accommodation. The mortgage finance penetration rate in Mexico is low at 9.7 percent (2018), below the average of 10.1 percent for upper middle-income countries and 42.2 percent for the Organization for Economic Co-operation and Development (OECD) countries. The segmented mortgage market contributes to this shortage, as banks generally provide housing finance to higher-income households, while public mortgage providers typically serve low and middle-income borrowers.
Daniel Braatz, CEO of FHipo, said:“IFC’s timely funding will increase access to housing finance for formal sector workers that are currently underserved by commercial lenders. Investor appetite has decreased in the local market due to the COVID-19 crisis, so this financing will send a positive signal to attract additional investors to FHipo while enhancing our business model.”
In addition to contributing to the deepening of Mexico’s capital markets, the project will also help reduce 2,600 tons of CO2 emissions per year by funding mortgages with energy savings potential. As part of the Paris Agreement to reduce greenhouse gases by 25 percent by 2030 relative to business-as-usual projections, reducing the housing sector’s emissions is a priority for Mexico.
IFC’s initial project with FHipo in 2018 helped the company attract additional investors and diversify their funding sources. FHipo currently co-finances mortgages offered by two government agencies—Instituto Nacional de la Vivienda (Infonavit) and Fondo de la Vivienda del Instituto de Seguridad y Servicio Sociales de Trabajadores del Estado (Fovissste).
Stephanie Rubach, Senior Investment Officer of IFC, declared: “One of IFC’s priorities in Mexico is to support the demand for housing with a focus on affordable and sustainable housing finance options. In sync with government efforts, this project will promote financial intermediation and inclusion by providing access to financing for affordable housing and by expanding mortgage origination through digital channels,” said Rubach. And added: “FHipo’s example is likely to encourage more domestic and international investors to take part in the Mexican housing sector, mobilize capital into Mexico’s mortgage market, and support the country’s climate change goals.”
IFC is a leading international investor in housing finance. IFC’s goal is to help clients seize opportunities in housing finance, which has an estimated global investment potential of as much as $700 billion.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
FHipo is the first real estate investment trust established to acquire, originate, co-participate, and manage mainly mortgage portfolios in Mexico. Currently, it is the only investment vehicle that provides investors with exposure solely to the Mexican mortgage market and rewards them through a combination of dividend payments and capital gains. FHipo is managed by CH Asset Management, S.A.P.I. de C.V., which has a management team that overall accounts with more than 50 years of experience in the finance and mortgage sector.