Peru’s population of 29.4 million people is nearly 72
percent urban. As of 2011, 68.5 percent of households lived in homes they owned
with just under ten percent living in rental properties and nearly six percent
squatting in illegally built residences (INEI). Peru has experienced rapid
economic expansion over the past few
years with GDP per capita in PPP terms rising over 44 percent from $7,784 in
2007 to $11,275 in 2013 (WEO).
Over the past five years, the amount of mortgages loans outstanding has rapidly expanded in Peru. In 2007 the year-end value of mortgage loans was slightly over $2.7 billion while by the end of 2011 the amount had risen to nearly $7.5 billion (Central Reserve Bank of Peru). The growth in home mortgage loans has even exceeded Peru’s impressive GDP growth as the share of mortgage loans as a percent of GDP has nearly doubled from 2.56 percent in 2007 to 4.22 percent in 2011 (Central Reserve Bank of Peru).
Banks account for the vast majority of home mortgage loans in Peru overwhelmingly using retail funding (Asbanc). According to Peru’s Ministry of Housing, since 2010 increased efforts have been made to create a market for mortgage bonds and a secondary market for the securitization of mortgages in an effort to expand the mortgage market and to help diversify risk for banks. These two funding methods have existed since 2008 account for only a small fraction of Peruvian home mortgage loans. Peru’s government has also been involved more directly in mortgage markets through Fondo Mi Vivienda. Fondo Mi Vivienda is a Peruvian government program aimed at providing mortgage funding for low-income households. It operates with a small budget given the overall size of the home mortgage loan sector accounting for roughly $400 million in loans in 2012 (FMV) or five percent of the total loans originated.