Low Income Housing in Spotlight

With retail borrowers well-supported by government institutions, the lower-income section of the Mexican housing market should become more competitive in the economic downturn, Carlos Moctezuma, CFO of Homex, tells LatinFinance. Most of the homebuilder’s sales are to the low-to-middle income segment of the market, where SHF, Infonavit and Fovissste provide mortgage assistance to buyers. While S&P says concentration of mortgage origination at public housing agencies will increase vulnerability to political risk, Moctezuma says this segment will be much better protected during the downturn. Competitors with greater exposure to higher-income segments may turn to focus on the lower-income buyers, he explains, thereby increasing competition. There is also opportunity for Homex and its large rivals to take market share away from much smaller competitors, who may suffer limited access to financing. “I don’t see major players involved in M&A activity, but I do see a focus on gaining market share this year,” Moctezuma says. As long as GDP growth does not fall exceptionally and indicators like employment and consumer confidence remain stable, there should be enough customers for all players in the low-income housing market, which Moctezuma says represents 80%-90% of the available mortgages in Mexico. He adds that Homex – which last visited the DCM in 2005 – has no borrowing plans this year, with short-term credit lines in place for working capital needs.