The%20Demand%20for%20Mortgages%20under%20Macro%20Volatility%3A%20The%20Argentine%20Case

Technical Notes

The Demand for Mortgages under Macro Volatility: The Argentine Case


CODE: IDB-TN-284
AUTHOR(s): Auguste, Sebastián , Bebczuk, Ricardo N. , Moya, Ramiro
PUBLISHED: November 2011
LANGUAGE: English
RELATED TOPICS: Poverty Reduction and Labor
DOWNLOAD FILE IN: English

Abstract:

This paper analyzes mortgage loan demand in Argentina using a new survey administered in the Buenos Aires Metropolitan Area. It finds that recurring macro volatility and violation of financial property rights have increased demand for real estate as an investment, which in turn boosts housing prices and makes it more difficult for consumer households to meet minimum income requirements for obtaining a mortgage. Affordability thus seems to offer a better explanation than standard supply side constraints for the small size of the mortgage market in Argentina. Overall, the shallow mortgage market has not posed a major impediment to home ownership in Argentina and the small (and shrinking) mortgage market has more to do with lack of demand than credit supply constraints.

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