Fully 67 percent of Bolivia’s 10.1
million people live in urban areas. Both the overall and the urban population
totals grew at an annual rate of 2 percent in 2011 (WDI).
As of 2009 Bolivia’s overall owner-occupation rate was 60.61 percent; another 12.55 percent of units were given to family members for use (Instituto Nacional de Estadística). In the countryside the owner-occupation rate is higher (78.93 percent); in urban areas only 51.08 percent of units are owner-occupied. Only 17.88 percent of total units are rented to tenants (Instituto Nacional de Estadística).
The private financial sector is the main driver of home mortgage loans in Bolivia, working almost exclusively through retail funding (UN-HABITAT). The largest bank in Bolivia is Banco Mercantil followed by Banco Nacional and Banco de Crédito. Most banks are concentrated in Santa Cruz and La Paz. The remainder of the country is fairly under-banked (Banco Central de Bolivia). Home mortgage loans are beginning to be a more important part of the financial credit system in Bolivia. From 2001 through 2005 home mortgages made up 26.2 percent of Bolivia’s total credit. In the past 5 years mortgage loans accounted for 31 percent of the total credit available in the financial sector (Banco Central de Bolivia).
Bolivia had issues with inflation above 10 percent annually until 2009’s recession, when inflation fell to under 1 percent. Since then the inflation rate has rebounded slightly to 6.9 percent at the end of 2011 (WEO). During high inflation, most mortgage loans were denominated in U.S. dollars. Recently that trend has been changing and more new loans are issued in bolivianos. In 2010, 42 percent of newly issued home mortgage loans were in bolivianos. In 2011 58 percent of home mortgages were in bolivianos (Banco Central de Bolivia).
In Bolivia microcredit institutions have also played a major role, with BancoSol in particular being a source of innovation. Although it began as an NGO created out of the Fundación para la Promoción y el Desarrollo de la Microempresa, BancoSol transformed into a commercial bank in 1992 to increase its capital and to access local savings. BancoSol and Banco Los Andes, another microfinance NGO that turned into a commercial bank in the early ’90s, were two of the first commercial microfinance providers in the world. Both dealt with identity issues early on as disagreements arose between people focused on banking and those focused on development. Since then both banks have improved their hybrid approach to providing loans to the poor (Battilana, Academy of Management Journal). BancoSol and Banco Los Andes now account for a combined 15 percent of Bolivia’s total financial system by value (Banco Central de Bolivia). Further demonstrating the importance of these commercial microcredit lenders, BancoSol was named the Best Bank in Bolivia in 2010 by World Finance.