Next Billion, 11 April 2017 (with Sam Mendelson)
A thought experiment. What if we designed financial services based on the hierarchy of human needs? We would prioritize food, shelter … hmm. Shelter. That’s pretty high on the list.
Consider the financial portfolio of a typical reader of this site. What’s the single largest financial product this person has ever relied on? Most likely the answer will be a home mortgage. In fact, home mortgages comprise the bulk of retail credit in wealthy economies, nearly 90 percent in the U.S. and UK. And yet, housing finance plays but a bit part in the financial inclusion story. Habitat for Humanity, the world’s leading NGO dedicated to housing, estimates that while 1.2 billion people need improved shelter, only 2 percent of microfinance portfolios consist of housing loans. Why?
As a fundamental human need, housing has tremendous social returns. Substandard housing greatly deepens the effects of poverty. Exposure to the elements, poor ventilation and insufficient hygiene and sanitation facilities all contribute to poor health, including major killers such as childhood diarrhea. Poor building structures and risky locations undermine physical safety, vastly increase vulnerability, and are the leading cause of death following natural disasters. Lack of lighting and sufficient space limit children’s ability to study, affecting educational opportunities. Insufficient privacy and lack of toilet facilities can contribute to sexual assault and constrain opportunities for women and girls. And lack of clear property rights are major contributors to crime and social injustice, while creating a negative feedback loop by limiting families’ ability to invest in better housing. more →
e-MFP, 3 February 2017
Financial Inclusion. Housing.
How often have you seen the two concepts appear together? If you think rarely – you’re not alone. Housing finance is that mysterious niche that crops up from time to time, but rarely makes headlines in our sector. And that’s both a conundrum and a shame.
Housing is a core human need and a top investment priority for families anywhere. Whether rich or poor, housing is often the single largest capital investment these families will ever make, that is to say, it cries out for effective products to help finance it. Unsurprisingly, housing finance is a core of financial services in wealthy nations. Indeed, if you’re over 40, chances are that a home mortgage is the single largest loan that you, dear reader, ever held. And yet in the financial inclusion and microfinance sector, housing gets notoriously short shrift. Habitat for Humanity, the world’s leading NGO dedicated to housing, estimates that while 1.2 billion people need improved shelter, just 2% of microfinance portfolios are dedicated to housing. more →
Microfinance Focus, 25 November 2012, Co-authored with Vikash Kumar
This article is part of a series aimed at understanding what’s happening in India’s affordable housing sector. It is based on interviews with residents of three low-cost housing projects: Vaishnavi Sai (outside Mumbai), Anandgram (outside Pune), and Janaadhar Shubha (outside Bangalore). The interviews were conducted during May-June 2012. Read Part 1 here.
After a long train ride – nearly two hours – the line ends. Passengers disembark at a small, but bustling community, easily covered on foot. The commerce around the station is busy, but within a few city blocks, one already spies farmland beyond the last rows of houses. Residents of all stripes live here, but the feel is decidedly working-class.
This could easily be late 19th century streetcar suburb outside Chicago or New York. Or a fin-de-siècle banlieue on the outskirts of Paris. But no, it’s Virar, one of the terminal stops on the Western Railways line heading north out of Mumbai. Read full article here.
Microfinance Focus, 16 October 2012, Co-authored with Vikash Kumar
This article is part of a series aimed at understanding what’s happening in India’s affordable housing sector. It is based on interviews with residents of three low-cost housing projects: Vaishnavi Sai (outside Mumbai), Anandgram (outside Pune), and Janaadhar Shubha (outside Bangalore). The interviews were conducted during May-June 2012. Read Part 2 here.
Something is afoot in the low cost housing market in India. Over the last two years, dozens of commercially-built projects targeted at the lower middle class have been going up in cities across the country, with tens, if not hundreds, of thousands of units being built. In the past six months, many of these projects have begun opening their doors to the new residents. We decided to pay some of them a visit. more →
European Microfinance Platform, August 2012 Newsletter
Allow me an impertinent question, dear reader: what was the largest loan you ever borrowed? Now, let me venture a guess – was it your home mortgage? If you answered no, then you probably fit either of three profiles: 1) you never had to buy a home, 2) you live in a country with limited financial access, or 3) you are very lucky.
Let’s set luck aside for the moment. Why the first two assumptions? Because in developed countries, mortgage finance takes by far the largest share of consumer credit. In the US, mortgages on residential property account for 84% of average household debt. In the UK, the number is 89%. There is no question that the primary goal of retail lending in rich countries is to fund housing. Now consider the numbers for housing loans in the microfinance sector.
They are depressingly small. more →
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