 Positive Outlook for Mexican Mortgage Market
The Mexican mortgage industry will continue to grow in 2005. Growth
will be bolstered by Infonavit’s, (the Mexican federal home financing
agency) decision to increase the number of co-financed loans. So far six
banks and 12 Limited Purpose Financial Companies (Sofoles) are
participating in Infonavit’s program. This is expected to push mortgage
growth for Infonavit up by 14% because co-financed loans will finally
help satisfy the pent up demand for mid-income housing. Historically,
Infonavit’s ceilings on loans allowed only low-income housing loans to
be considered with any seriousness.
 Further evidence of growth was confirmed in early January, when
Mexico’s federal mortgage bank Sociedad Hipotecaria Federal (SHF)
undertook the country’s first transaction of mortgage-backed securities
on the secondary market. SHF sold 10 million pesos in mortgage-backed
securities to the bank Santander Serfin. The transaction marked a big
step in the strengthening of the housing industry as it bolsters
confidence in the market’s liquidity.
The boom in the housing market is causing banks to buy up leading
Sofoles in order to gain market share and the expertise that the Sofoles
have in low income mortgage lending. Mexico’s leading bank, BBVA
Bancomer bought up the top financing company Hipotecaria Nacional (Hipnal)
for US$375 million in September Hipnal, which was recently given the
long-term national scale credit rating of AAA from a previous A- by
Fitch, plans to fund the construction of 75,000 homes in 2005, an
increase of 84 percent over last year. Mexico’s second-largest Sofole,
Hipotecaria Su Casita (HSC), announced on January 23rd that it will
start a joint venture with the U.S. bank First Jersey Mortgage Services
The Canadian bank, Scotiabank Inverlat, also wants to get a piece of the
cake and is in a due diligence to acquire 80% of the third place Sofole
Crédito y Casa.
There is a clear trend of consolidation in the industry.
InfoAmericas predicts only a few more large bank acquisitions of
Sofoles during 2005, although there will be growing pressure for
regional Sofoles to merge amongst themselves. Market demand is so large
that initial growth will focus on branding and first to market
maneuvers. Competitive benefits to home buyers will likely not emerge
with strength until mid 2006.
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