Rental guarantee insurance could unlock Argentina's housing market, economist says

Argentina's mortgage credit market is grappling with two intertwined problems: a persistent scarcity of loanable funds and a demand side hampered by informality and income volatility. Economist Federico González Rouco highlights that the lack of long-term investors and a structural shortage of pesos for lending create a supply-side deficit. On the demand side, while economic recovery can increase the number of potential borrowers, a significant portion of the population struggles to prove their income, effectively barring them from credit access regardless of interest rates.

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The chain of guarantees relies on a property base that is narrowing, and renting becomes difficult for those who need it most.

Beyond income, a less discussed but critical issue is the societal shift away from property ownership. This trend not only complicates purchasing a home but also erodes access to rentals. The rental market traditionally relies on real estate as collateral; typically, a young person needs a family member to offer a property as a guarantee. As fewer families own property, this crucial support system dwindles. González Rouco explains that this shrinking base of property owners makes it increasingly difficult to secure rental guarantees, disproportionately affecting those who need housing the most.

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A society that is not owner-based.

To address this complex situation, González Rouco points to rental guarantee insurance as a potentially powerful, yet underutilized, instrument. Instead of requiring a physical property as collateral, tenants could obtain an insurance policy to back their rental contracts. This mechanism would decouple rental access from family property ownership, opening doors for households currently excluded due to a lack of real guarantees, not necessarily a lack of payment capacity. The immediate effect would be increased activity in the rental market and broader access to housing. Furthermore, each successfully fulfilled insurance-backed rental contract could help build a payment history for individuals often excluded from traditional financial systems.

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In place of requiring property as a guarantee, the tenant contracts a policy that backs the fulfillment of the contract.