On Wednesday, Economy Minister Luis Caputo unveiled a plan to boost mortgage lending in Argentina at AR$2 trillion (US$1.3 billion at the official rate). “The 2 trillion pesos we would be auctioning would provide housing solutions for 17,000 to 18,000 families,” he said at a conference on Wednesday morning. The funds will be sourced from the Sustainability Guarantee Fund, which is designed to secure long-term deposits at financial institutions, enabling these banks to extend additional home loans. The FGS operates as a sovereign wealth fund under the management of the state pension agency ANSES. It serves as a safeguard to ensure pension disbursements during periods of economic turmoil or declines in tax income.
Commenting on the announcement, Broking Puente observed that the scheme is not novel, as a comparable initiative was implemented during former President Cristina Kirchner’s first term (2007-2011). “It was done back in 2009, after the international financial crisis, when the FGS auctioned fixed-term deposits so that banks could then finance purchases of domestically made cars,” the firm said. Caputo stated that the plan seeks to address a fundamental issue in Argentine mortgage lending. “The stock of mortgage loans in Argentina barely amounts to two points of GDP,” he said, adding that, by way of comparison, the figure in Chile is “roughly 27%.” In the United States, that figure is 75%, which leaves “enormous room for growth.” Caputo also pointed out that the initiative is going to be a “very significant boost for the development of this market and for the economy in general.” Construction is poised to be one of the largest beneficiaries – and it requires support. The government’s freeze on public works has resulted in activity being 20% lower than its November 2023 level, as reported by the official figures from the statistics bureau Indec.
Research from the Center for Argentine Political Economy indicates that the sector has experienced a decline of more than 1,600 companies and a loss of 80,000 jobs during this period. Reviving construction was also one of the points emphasised by International Monetary Fund Managing Director Kristalina Georgieva during her recent visit to the country. In a statement, Gustavo Weiss, President of the Argentine Chamber of Construction, characterised the decision as “positive,” while conceding that “the volume isn’t much” at this stage. Caputo stated that the AR$2 trillion will be distributed via auctions of AR$200 billion (US$132 million) each. The first has been tentatively scheduled for the initial week of September. Weiss posited that additional units will be generated as this quota concludes, noting that the strategy is designed to stimulate home sales: as the inventory of completed residences diminishes, the construction of new homes is expected to commence.
Weiss confirmed that banks are “enthusiastic,” a sentiment reflected by several lenders. “It’s a measure that’s in line with everything to do with the recovery of the economy, and it gets a lot moving,” one source said. “A lot of [small and medium companies] are tied to construction and renovation, and I think this goes in that direction.” Some exhibit greater caution. The Association of Public and Private Banks of Argentina stated that it is currently evaluating the announcement to ascertain its implications and operational mechanics. They also noted that they had not had “prior conversations with the economic team about this initiative.” The association acknowledged that the measure amounts to “a public policy intervention aimed at providing liquidity to the mortgage market.” However, they pointed out that it was important that the program “guarantee conditions of access for all financial institutions, so that it can contribute to the development of mortgage lending in a broad and balanced way.”
