Expert Warns: Mortgage Credit Must Be Stable, Not Volatile

Argentina's mortgage system is grappling with a fundamental issue: the scarcity of long-term funding for banks. Banks primarily attract short-term deposits, creating a significant mismatch with the long-term nature of mortgage lending, which typically spans 20 to 30 years. Addressing this funding gap is crucial for developing a deep and sustainable mortgage market. The government has taken a notable step by agreeing to explore the possibility of the Sustainability Guarantee Fund (FGS) placing long-term deposits in banks, with the condition that these funds be used for mortgage lending. This initiative is supported by the real estate sector. However, an expert argues that further measures are needed to truly revitalize construction and ensure lasting access to housing. Daniel Basualdo, an analyst, emphasizes that when the FGS selects banks for these funds via auctions, it should not solely consider interest rates and terms. Banks should also commit to specific uses for the funds, such as financing the purchase of homes still under construction, particularly for middle-income sectors and with a federal distribution of credits. Basualdo highlights the time lag in real estate development, where projects can take three to four years to complete, and buyers might only access traditional mortgages upon completion. He points out the historical volatility of mortgage credit in Argentina, which tends to appear and disappear with macroeconomic crises. To mitigate this risk for developers and ensure buyer access, Basualdo advocates for a different approach: financing buyers directly from the construction phase, known as "financing from the well." This method, facilitated by divisible mortgages, allows buyers to secure long-term financing while the property is still being built, providing developers with necessary funds. While the legal framework exists in Argentina, a developed banking operation for this model at scale is still lacking. This approach is not novel, as countries like Peru have developed similar mechanisms for financing future housing over several years.

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It is not enough for mortgage credit to return; the challenge is that it does not appear and disappear all the time.