Mortgage payments fundamental problem

For me, to offer 100 per cent mortgages is just a distraction. He said the fundamental problem was that many were simply too poor to meet mortgage payments. With annual inflation currently exceeding 30 per cent, this is becoming increasingly difficult.

“The people who are going to benefit from this are those who earn more, as they have a greater ability to pay,” said Mr Neri, adding that by law mortgage payments could not exceed a fifth of monthly incomes.

A further problem, he added, was a shortage of finance sources. Analysts point out that the state’s recent takeover of Banco de Venezuela, owned by Grupo Santander of Spain and the country’s third largest bank, could limit lending further.

While private banks lend on average more than 60 per cent of deposits, public sector banks only lend about 15 per cent, preferring to invest in government debt, said César Aristimuño, a financial analyst in Caracas.

The new regulation is likely to make it even harder to obtain mortgage finance: with most banks already having reached mortgage lending limits, the absolute number of mortgages will tend to fall. “Lending will slow down and fewer people will have access to credit,” said Mr Aristimuño, adding that the trend would be reinforced by a substantial jump in interest rates this year.

Mr Chávez’s promise to provide adequate housing has been one of the hardest to keep. When he was elected in 1998, Venezuela’s housing deficit was estimated at about 1m homes; it now exceeds 1.8m, according to Mr Neri.

To cover the deficit within 15 years, some 250,000 homes would need to be constructed each year, given population growth. “We are in no condition to do that,” said Mr Neri.

According to the real estate chamber, about 272,000 houses have been built during Mr Chávez’s presidency, although the pace of construction has increased markedly in the past two years as a result of new legislation, reaching almost 83,000 built last year.

Analysts list several problems confronting the housing sector. Chief among these is a burdensome bureaucracy that slows down permits, as well as insufficient machinery, building materials and infrastructure.

They add that the problems have been aggravated by the inconsistency of government strategy, exemplified by the fact that housing ministers have been changed no fewer than four times since January.

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Mortgage payments fundamental problem

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