Colombian Mortgage Market

1
Colombian Mortgage Market

• Pricing Structure

Early 70s
70s early 90s
Mid 90s Late 90s
Dec 99
2000
2002

• UPAC collapsed
• M.IR reached 60.
• Economic recession.
• Capitalization of interests was declared
  unconstitutional.

• UPAC was modified several times
• Linked to M.IR.
• Capitalization of interests.

• UVR

• Creation of UVR.
• Linked to inflation.
• Conversion of CAVs into Banks.

• Loan balances recalculated with UVR.

• Creation of UPAC (Unit of
• Constant Purchasing Power).

2
Colombian Mortgage Market

• Mortgage trends

Disbursements
Stock
Stock
3
Creation of the CHMC

• WB Strategy and IFC Role

• Early Stages 1993-1998
• Support in the drafting of the new mortgage and
  capital market Law.

• Intermediate Stages 1999- mid 2001
• Assistance in the implementation of the new Law.
• Addressing the Constitutional Court ruling.
• Break barriers between institutional investors.
• Creation of an Ad-hoc Repo mechanism with CB
• Creation of a Clearing Mechanism

4
Creation of the CHMC

• WB Strategy and IFC Role

• Final Stages Late 2001-2002
• Creation of the CHMC in July 2001
• IFCs equity investment of US40 million and LCGF
  of US100 million.
• Attract new investors (AVVillas, Colpatria, CAF).
  
• Assistance in risk management, technological
  development and organizational structure.

5
Creation of the CHMC

• WB Strategy and IFC Role

• Recent Achievements 2002
• First mortgage issue in April 2002
• COP 464 billion (US 200 billion)
• Demand 8.9 times.