Toward a nation of homeowners

For decades, Argentines lived with an economy in which credit was practically absent. Buying a home or financing an investment became a privilege for people who already had capital, or for those who could obtain cheap state-backed lending. For everyone else, the rule was simple: save first, buy later. In an inflationary economy, “later” might never arrive.

The system also punished savers. Banks often paid interest well below inflation, encouraging people to withdraw their money, buy dollars or property, or spend before their savings lost value. At the same time, borrowers could benefit from subsidized or artificially low rates when inflation reduced the real value of their repayments.

A healthy credit system requires the opposite incentives: saving should make sense, depositors should receive fair compensation, borrowers should repay what they receive, and banks should earn money by connecting the two sides. Argentina is beginning to move in that direction. Private-sector credit is growing again, a change the article says deserves more recognition.

In July, bank lending in pesos reached 9.2% of GDP. Including foreign-currency loans, private-sector credit reached 12.5% of GDP. The figures remain low by international standards. Using the World Bank’s broad and comparable definition, private-sector credit represented 40% of GDP in Peru, 76% in Brazil and 104% in Chile in 2024. In the United States, it exceeded 200%.

The gap is even wider in mortgages. Mortgage credit in Argentina amounts to just over 1% of GDP, compared with about 27% in Chile and 50% in the United States. Relative to the size of its economy, Chile’s mortgage market is more than 20 times larger.

The article attributes Argentina’s long credit drought mainly to chronic fiscal deficits. For years, particularly under the Kirchnerist model, the state absorbed much of the available financing. Deficits had to be funded through money creation, Treasury borrowing or resources from the Central Bank, directly or indirectly.