In 2011 Paraguay had a population of 6.57 million people. Sixty-two
percent of Paraguayans live in an urban environment. Over the past five years
the annual growth of the urban population (3 percent) has outpaced that of the
total population (2 percent) (WDI).
Paraguay has a small home mortgage market. The total amount of home mortgage loans outstanding at the end of 2011 amounted to under $300 million USD. The private sector, divided between locally owned banks and foreign-owned banks, provides the majority of Paraguay’s home mortgage loan market. Locally owned banks in 2011 possessed outstanding credit of 118,566 million guaraníes, which is just over 9 percent of total Paraguayan home mortgages by value (Central Bank of Paraguay). Foreign-owned banks accounted for the vast majority—90 percent—of outstanding Paraguayan home mortgage loans. The largest single player is Banco Itaú Paraguay S.A. with total mortgage loans amounting to $216 million USD, which accounts for almost 75 percent of the entire Paraguayan home mortgage loan market (Central Bank of Paraguay). Banco Itaú Paraguay S.A.sees the mortgage market as very underserviced and intends to grow that line of business. The majority of bank credit goes to businesses, especially the agricultural sector. Banco Itaú Paraguay S.A. accounts for only 14 percent of total financial assets in Paraguay.
Savings and credit cooperatives play a major role in the Paraguayan financial system but remain minor players in providing home mortgages. Only one of these cooperatives provides housing loans and it reports to the Superintendencia de Bancos for supervision. The remainder of the more than 1,700 cooperatives in Paraguay report to their own specialized regulator, the Instituto Nacional de Cooperativismo (INCOOP), and focus their loans on the microfinance sector. The public sector plays a very minor role in the Paraguayan home mortgage market. One bank is publically owned--Banco Nacional de Fomento–and it provides only a few mortgages each year.
Fewer than 10,000 of the almost 25,000 new housing units produced annually were legally constructed (SENAVITAT). The majority were built without permits or legal ownership. This stunts the growth of the Paraguayan home mortgage market since private banks are unwilling to use those homes as collateral for loans or to provide funding to purchase informally constructed and non-registered housing units.