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Housing Finance - Webinar Slides - 16th may 2012
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Housing Finance - Webinar Slides - 16th may 2012

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All slides used in the Housing Finance webinar on May 16th 2012.

All slides used in the Housing Finance webinar on May 16th 2012.

Published in: Business, Economy & Finance

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  • 1. Housing Finance for the Poor in Asia Two Perspectives on BestPractices and Promising Trends in the Region The Banking with the Poor Network featuring Habitat for Humanity and LFSUS
  • 2. Webinar Agenda3:00 – 3:10pm About this Webinar3:10 – 3:30pm Jennifer Oomen and Rajan Samuelof Habitat for Humanity will present trends and bestpractices in housing microfinance in the Asia-Pacificregion, and considerations for adding value to theborrower experience.3:30 – 3:50pm Ayanthi Gurusinghe of LFSUS, willdiscuss affordable housing finance through makinglow-income settlers bankable.3:50 – 4:15pm Discussion and question time
  • 3. About this Webinar- Attendees will be muted during the presentation;they will be given the possibility to speak onlyduring the discussion time - At the end of the Webinar a follow-up emailcontaining a survey will be sent to all theattendees- Two practical tips:
  • 4. How to raise a question To ask questions or make comments type them into the “questions” window in your menu and we will answer during the discussion time
  • 5. How to ask to participate actively To participate actively use the tool “raise hand” from your menu during the discussion time. We will allow you to talk making you unmuted.
  • 6. The Banking with the Poor Network (BWTP)•  Association of microfinance stakeholder organizations from across Asia - most of BWTP’s members are MFIs and the secretariat based in Singapore.•  Committed to improving the quality of life of the poor, through promoting and facilitating access to sustainable financial services.•  We do this through co-operation, training and capacity building initiatives, with the aim of achieving innovative, appropriate and demand-driven financial services for the poor. www.bwtp.orgthe poor.
  • 7. Housing Finance for the Poor in Asia Two Perspectives on BestPractices and Promising Trends in the Region The Banking with the Poor Network featuring Habitat for Humanity and LFSUS
  • 8. Housing Finance inAsia-PacificBest Practices and Trends fromthe Grassroots Level Presented By: Rajan Samuel, Housing Finance Manager Jennifer Oomen, Housing Finance Manager Habitat for Humanity International Center for Innovation in Shelter and Finance
  • 9. Presentation Outline • Trends in Housing Finance in the Asia-Pacific Region • Habitat’s  experience  in  housing  finance • Adding Value through non-financial support services2
  • 10. Dedicated to eliminating poverty housing  Improving shelter in nearly 90 countries and territories around the world.  HFHI has helped over 2 million people in 3,000 communities gain safe, decent, affordable shelter since 1976. The Center for Innovation in Shelter and Finance facilitates collaboration between public, private, and third sector partners to develop sustainable, and innovative housing solutions.3
  • 11. Housing Finance in Asia Pacific Region4
  • 12. The challenge of poverty housing Only 5% of developing country households have access to formal housing finance  Lack of formal jobs  Lack of land title  Money lenders may charge 200-300% interest per year5
  • 13. Opportunities in the Poverty Housing Pyramid HOUSING SUPPLY Primarily commercial Mortgage bank housing sector Micro Housing Finance Greater Mortgage Corporation – Nano than $400 Sector Housing Low Income Group – MFI / HMF Less than Bankable Poor $400 Economically Weaker Section – MFI / Less than $200 Subsidy Below Poverty Line Vulnerable Beneficiaries Grant Less than $100 HOUSING DEMAND INCOME RANGE PER MONTH6
  • 14. Habitat’s Product Mix: Lending Models 1. Philanthropic Model o ReBuild post-disaster; Retail Mortgage Program 2. Save & Build Model o Sri Lanka Savings Groups 3. Partnership Model (institutional lending) o Nepal’s  Village  Banks 4. MFI Partnership Model o HFH India Technical Assistance7
  • 15. Products Continued • Lending terms & loan size is based on the lending model & product offering – ex: Save & Build (Nepal) – savings account for more than 75% of the loan • “Sweat  equity”   – Client + family is expected to contribute 200- 1000 hours of sweat equity (depending on the type of housing intervention) • Eligibility – Poverty indicator – per capital income of the family (ex: Cambodia US $ 2 per day)8
  • 16. Promising Trends in the Region • MFI Market: Demand to diversify products and services • Current Research supporting separate housing finance product provision • National Housing regulators promoting housing finance through MFIs • Micro-mortgage space is developing but housing microfinance is a emerging market opportunity9
  • 17. MicroBuild Fund Investments in Asia-Pacific for 2012 include India, Cambodia and Philippines.10
  • 18. Adding value to the borrower experience through technical assistance11
  • 19. Adding value to the borrower experience 70% of home improvements or upgrades are completed via self-construction Increasing availability of both financing and technology is important.12
  • 20. Support Services & Housing Value Chain On-going Construction support Design supervision services Assistance to or technical advice, obtain or assistance Assistance to building Community produce quality Development access finance, services building Housing Assistance subsidy, or materials to secure or savings Design and Assistance improve facilities building to secure services Building skills/services materials land and Financing tenure Essential services Land and (WATSAN, The value chain identifies all of the main Tenure power, etc.) components needed for access to adequate and affordable housing solutions.13
  • 21. Connecting finance with technical assistance Financial Education with technical assistance to make home improvement goals a reality. Goal Setting & Planning for your home improvement Family Finance: Family budgeting, debt management, managing remittances & savings Making your goal a reality: Budget & Save for home improvement, financing options Implementing your home improvement: Choosing the best materials, skilled workers, negotiating with contractors, etc. By linking financial literacy with technical assistance we are bringing together the borrowers and the skilled workers into the same room.14
  • 22. Example from India • Go Finance providing loans to their high-performers • 100% are women • Loan size averages US$700 • Loan product is introduced with a 90 minute  “Financial  &  Construction Technical  Briefing”  where  clients: – Identify their housing goals and needs – Calculate their debt capacity – Hear about different material options – Ask questions to a licensed architect15
  • 23. Results Before preparation: Added-Value of Financial Orientation & Technical Assistance: • 95% clients seek a higher loan amount than • Set a process to achieve their goals is needed. • Prioritizing health-related • 90% are not saving for improvements housing • 75% of housing clients seek low- level of support services in the • 40% unable to calculate form of designs and information their EMI • Clients are willing to pay fee for getting accurate Bill of Quantities16
  • 24. Sanitary Toilets in Cambodia Self-Build Latrine Core Thatch/leave Brick Brick with Component Component Superstructure Superstructure plaster finish 10 USD 40USD 87-100 USD 187-200 USD 242-300 USD Different Water & Sanitation Solutions at various price points.17
  • 25. Costing Technical Assistance Moving beyond cross-subsidy, examples from the sector: PRODEL, Nicaragua; Interest Rate Percentage fee tied to loan TSPI, Philippines amount technical assistance; 5% on loan amount Technical Assistance Fee for Service $5 on $500, $10 on $1000 Center, India Business case is supported when technical support responds adequately to the demand.18
  • 26. Trends • Demand to diversify products and services. • Financing with technical support can improve the loan usage. • Small fees can offset additional costs.19
  • 27. Resources for further information Habitat  for  Humanity’s  Center  for  Innovation  in  Shelter  and  Finance Toolkits and advisory services available globally THE BIG IDEA: Global spread of Affordable Housing Series of articles on Housing for the BOP compiled by ASHOKA and including writings by Habitat White Paper: The Role of Financial Education in Improved Housing written by Habitat for Humanity International20
  • 28. Please contact us at: Rajan Samuel, rsamuel@habitat.org Jennifer Oomen, joomen@habitat.org Habitat for Humanity International Center for Innovation in Shelter and Finance Based in Makati City, Metro Manila, Philippines21
  • 29. LFSUS% MakingLow+IncomeSettlers Bankable By%Ayanthi%Gurusinghe% Chief%Executive%Of;icer%% Lanka%Financial%Services%for%Underserved%Settlements%
  • 30. Lanka%Financial%Services%for%Underserved%Se3lements%LFSUS% The#Credit#Enhancement#/#Guarantee#mechanism### was#created#:…….# TO#Bridge#the#gap#between#informal#market# ######and#the#formal#market## TO#Leverage#finance#opportuni;es#within# ######microfinance#ins;tu;ons## TO#Package#financially#viable#projects#
  • 31. • #Long#Term##Financing#• #Collateral#with#clear####;tle#deeds#?#
  • 32. Service%Delivery%Mechanism% ! No#ReKInven;ng#the#Wheel# ! Long#Term#Microfinance#Loans# ! Simple#Procedures# ! Door#to#Door#Service# ! Daily#,#Weekly#Repayment#Collec;on# ! Collateral#less#lending## ! Introduc;on#of#Commercial#Financing## # #
  • 33. Challenges% • !No!Direct!Income!Genera:on%% # • !Issues!With!Ownership! • !Probable! Ownership!changes! X# • !Long!Term!Financing!!X##Conven;onal#forms#of#collateral#were#not#available##X##There#are#high#lending#risk#because#of#the#financial#######vulnerability#of##group#lending##X##There#was#no#blueprint#to#follow,#in#terms#of#banking#with#####lowKincome#communi;es##
  • 34. LFSUS%%LENDING%#MECHANISM%
  • 35. LFSUS%%Supports%its%MFI%Partners%to………..%! MFI#member#and#their#families#out#of#homelessness#! Helping#them#to#upgrade#their#homes#thereby#####improving#access#to#water,#sanita;on#and#other#####basic#infrastructure#services#! Providing#an#asset#to#increase#their#economic######security#
  • 36. Overcoming%Challenges%%! Assessing#the#credibility#and#financial#behaviors#of#the#members,#rather#than#depending#on#tradi;onal#concepts#of#collateral#for#repayments##! PuUng#emphasis#on#peer#groups#pressure#as#a#mechanism#to#ensure#prompt#repayments##! Providing#extensive#credit#extension#services#! Prepara;on#of#project#feasibility#reports#formats#as#per#bank#requirements#
  • 37. Overcoming%Challenges%%! Crea;ng#Banking#track#records##through#savings####records##! Linking#with#other#formal#services#to#secure#lending#####eg:#insurance##! Establishing#a#con;nues#rela;onship#with#the#MFI#####partner#and#the#community#
  • 38. $Why%Leverage%Finance%?% Why%Commercial%Financing%?%• #PorKolio%Increase%!!!To!support!larger!number!of!community!members!!to!!!!access!!!housing!finance!• #Capital%redistribu:on%%!!!Exis8ng!capital!is!release!to!!support!other!sectors!• #Time%value%of%capital%funds%%!!!Capital!funds!can!con8nued!to!be!used!for!short!term!!!!investments!• #Sustainability%%Access!to!long!term!funding!opportunity!
  • 39. Housing%and%Infrastructure%Loans%%Include………………..% # • House#upgrading##and#Repairing## • Access#to##services## Water#,#Electricity#and#Drainage## #
  • 40. Reasons%for%the%growth%in%the%sector%# # • Demand# • Affordability# • Compe;;on# • Policy# • Securi;za;on# # #
  • 41. LFSUS%Operations% Ongoing% Kirulapona% Ratnapura% Hambantota%–%1%% Nuwara%Eliya%–%1%% Deniyaya% Nawalapitiya% Kaduwela% Nuwara%Eliya%–%2%% Hambantota%–%2%% Tissamaharama%#PorZolio#of#USD#1.4#million##
  • 42. ! Credit%worthiness% ! Security%of%Tenure%! Financial%literacy%! Nego:a:ng%Power%! Sustainability%………..% LFSUS%:%Transforma:on%in%to% Genera:ons%
  • 43. THANK%YOU%