Housing Microfinance

Meliza H. Agabin  (With thanks to colleagues Anthony Petalcorin   and Mark Guillermo)  2009 RBAP-MABS National Round table Conference May 12-13, 2009 Hyatt Hotel and Casino Manila

What is HMF?  Home Improvements  “The application of microﬁnance House Construc9on  principles and House/Lot Acquisi9on  methodologies to the provision of shelter ﬁnance.”*  - mall loan amounts! s - short-terms loans! - alternative forms of Microentrepreneurs  Households that have  no/limited access to  collateral! who rely on  decent housing  microenterprises for a  - regular amortization ! living   */CGAP!

What is HMF?  Home Improvements  Loans and other financial services to low-income households: • mprove or repair existing homes, I House Construc9on  • onstruct a new home in stages C • urchase a new home, P House/Lot Acquisi9on  • uy land B • nstall or improve utilities and I other basic services. Excluded: the financing of consumer items such as refrigerators, ranges, furniture, TV sets, etc. Microentrepreneurs  Households that have  who rely on  no/limited access to  microenterprises for a  decent housing  living  

Microenterprise vs. Housing Microﬁnance Loan   MEP  HMF  Small loan size  Larger loan size  up to P150K  up to P300K  Short  Longer  repayment  Repayment  term: Not more  Term: up to 3 to  than 12 months  5 years       RBAP‐MABS Program has submi3ed the Micro Housing Loan Product  Procedures to the BSP for ﬁnal approval.  Loan sizes are consistent with  HUDCC approval. 

Market Research Findings:     Clients  Survey conducted Surveyed  485  by MABS & MICRA Owns a House (72%)  349  in August 2008 30% No Legal Title  105  shows: 17% Living for Free/RenWng  59  11% RenWng  38  37% Own a land  129  - Excellent potential - Majority owns a home - Majority of businesses are home based

Market Findings:  • More demand for home  improvements.  MEP  HMF  • Home repairs e.g. roof, walls,  kitchen and extensions, are  funded mainly from personal  cash savings (72%) including  savings in building materials.  • Some have already used some of  their previous bank micro loans  for home improvement. 

Who needs HMF?  Microentrepreneurs who  Households that have no or  rely on microenterprises for  limited access to decent  a living   housing  Rural banks should develop a range of housing microfinance products intended to respond to the need of low-income entrepreneurial families to improve the quality of their homes or build new ones.

Benefits:  Bank  Clients  • CompeWWve Edge  • No hard collateral  • Client retenWon  required < 50K  • Diversity of loan  • Fast loan  products  approval  • Improve field  • Longer term  staff producWvity  • Easy and  • Increase  affordable  profitability  installments 

Results of the Pilot Test:  Pilot tested in August 2008 in Green Bank, CanWlan Bank & GM  Bank with 2 branches each iniWally parWcipaWng.  ComparaWve Performance: 

CLIENT STORIES FROM PILOT BANKS 

CanWlan Bank Client Mr. Hingpit received a loan  to complete construcWon of new home   Old house of Mr.  Visited by MABS/USAID a  few weeks ader receiving  Hingpit  70K HMF Loan  A vegetable vendor & microenterprise bank client of Cantilan Bank for over seven years.

Green Bank Client Sonia Melo, has received 3  loans for various home improvements  1st Loan Window Grills  2nd Loan Room ParWWon   3rd Loan Ceiling  Next Loan: Room RenovaWon   

Green Bank Client, Herminia Ferrer, with exisWng micro agri loan,  borrowed P20k home improvement loan with 6 mos. term.   Ceiling  Overhead cabinet  Carpenter husband does repair Window Grills  works.

 Green Bank Client Herminia ferrer   The couple plans to improve their store – including cemenWng the ﬂooring  Next project is productive housing - improve store space Proposed Improvement 

GM Bank Client Angelina Valerio  • oultry supply & grocery business P • pplied for P60K, 6 months A

Plans Targets Seek BSP approval to increase loan size  2nd Quarter 2009 and loan term for lot and house acquisition loans Rollout to additional banks 3rd Quarter 2009 The potential of housing microfinance depends on the (rural bank’s) ability to move beyond the confines of its original product characteristics and more deeply understand and respond to the needs of its clients. - ACCION

THANK YOU. 

Housing Microfinance

by MABSIV on May 26, 2009

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Housing Microfinance — Presentation Transcript