BRIEF

Housing Finance

February 2, 2018


Key Messages
  • Housing plays a key socio-economic role and represents the main wealth of the poor in most developing countries
  • 3 billion people will need new housing and basic urban infrastructure by 2030, according to UN-Habitat. Without available and affordable housing financing solutions, many urban poor can't get decent formal housing.
  • Our work in housing finance helps clients provide market-based safety nets, and fund long-term investments to support sustainable economic growth.

Overview

Housing plays a key socio-economic role and represents the main wealth of the poor in most developing countries. The UN estimates that the global population will reach 8.5 billion by 2030, with almost 60% of the population living in urban centers. An estimated 3 billion people will need new housing and basic urban infrastructure by 2030. Against the backdrop of rapid urbanization putting pressure on housing delivery systems, many urban poor will not be able to afford formal housing without proper housing finance solutions. This puts the issue of housing finance at the forefront of global development agenda.

Our Housing Finance business line assists clients in developing and deepening resilient and affordable housing finance markets that are accessible to the lower & informal income and middle-income households. This requires managing risks and regulating the lending industry, as well as implementing targeted and fiscally responsible policy interventions. The business line is important because it provides economic stimulus across the economy – leverage on growth, investment, and jobs – through the constructive value chain, helps in maintaining overall financial stability (housing finance markets representing a large share of the financial sector), and addresses the issue of urban poverty.

What We Do:

We work on a variety of housing finance development challenges by providing client countries with the tools to build and expand housing finance markets, fund housing finance (often through the mobilization of long-term mortgage securities where possible), develop sustainable and affordable housing finance markets, and respond effectively to housing finance crises.

We focus on creating systems that address the needs of households across different income levels and developing solutions that are scalable, sustainable, and oriented to the private sector. Our work in housing finance helps clients provide market-based safety nets, and fund long-term investments to support sustainable and inclusive economic growth.

Core interventions include:

  • Developing Resilient Housing Finance Markets: We conduct diagnostic analysis, advise on legal & regulatory frameworks and policy reforms, support institution building to create a sustainable and efficient housing finance system, and work on other building blocks of housing finance markets development.
  • Designing and Implementing Long-Term Funding Solutions: We provide solutions to improve access to long-term finance through capital markets instruments such as liquidity facilities and covered mortgage bonds as well enhanced systems to incentivize longer-term savings. We also help diversify long-term funding options, including through local currency bond markets.
  • Expanding Access to Lower-Income and Informal Markets: We enhance access to lower-income and informal workers’ segments of the population through credit markets, housing microfinance, rental housing, residential leasing, contractual savings, effective targeted subsidies, and guarantee schemes.
  • Addressing Obstacles to Affordable Housing: In addition to the finance side that affects the demand, affordability reflects the cost of housing and its supply, so increasingly, we work on various supply side issues: tilting, land use and land infrastructure issues, construction finance, and housing policies including supply subsidies. Furthermore, we apply innovative thinking to reduce costs – both financial and environmental costs – of formal housing through the introduction of new, cheaper, technologies and supporting energy-efficient buildings. 

Last Updated: Feb 02, 2018






Experts

Loic Chiquier

Chief Technical Advisor

Simon Walley

Lead Financial Sector Specialist


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