| Popis: |
In some emerging economies, housing provident funds (HPFs) are the main institutions that mobilize long-term funds for mortgage lending. Co-financing arrangements are often proposed to promote cooperation between these public funds and private lenders. Using supervisory loan-level data, we compare mortgages entirely funded by banks and the ones co-financed with the main HPF in Mexico. Our results provide evidence on co-financing potential to enhance mortgage conditions for borrowers (e.g., through higher loan volumes, reduced down payments), without increasing ex-post credit risk. Banks set aside substantially lower loan loss reserves for co-financed mortgages, but the pass-through of these gains into the interest rate is small. Finally, we study how a new credit plan launched by the HPF that shifts the co-financing supply towards higher-income borrowers affects banks' mortgage portfolios. The new plan is plausibly exogenous only for smaller banks. For this group, we find no negative impact when more generous lending conditions are offered by the HPF: They affect the mortgage portfolio composition (co-financed or traditional), but not the average volume. These findings generally support the use of public-private co-financing schemes among under-performing HPFs. They also call for a revision of banks' expected loss measures for co-financed mortgages. |
