Access to mortgage loans

Inadequate housing is endemic through El Salvador and most critically felt in cities and towns. Continued migration to urban areas is likely to exacerbate the situation, and access to mortgage loans for certain groups is limited. La Hipotecaria addresses this challenge and targets the low and lower-middle income population who are unserved or underserved by the traditional home mortgage finance providers. It provides mortgage loans to formally employed people, for owner-occupied properties, both new and used.

John D. Rauschkolb, Chairman of La Hipotecaria: “We are very proud to start a commercial relationship with Triodos Investment Management, a financial institution of international reputation and great social impact. The USD 10 million senior debt facility that we received for our operation in El Salvador allows us to continue providing mortgage loans. We trust that we have started a long-term relationship with Triodos and that it can continue to grow and improve the livelihoods of thousands of families in other countries where we operate.”

Solar panels

La Hipotecaria’s loan qualifications are stringent but fair and its well-balanced underwriting practices translates into marginal historic losses and low delinquency levels, even during the COVID-19 pandemic.

La Hipotecaria has agreements with construction companies to promote and finance buyers in the acquisition of houses in urban projects. Senior Investment Officer Michael Topf recently visited Las Pergolas, one of the residential real estate development projects south of the capital city. “On this site over 350 houses will be built in four stages; over half of the units have been delivered, and the rest are currently under construction. This is the first residential project that La Hipotecaria finances for this niche to use solar panels, which will provide every home with 30% of the required energy.”  

Landmark investment

This facility marks the fund’s first investment in the Latin America region in a company dedicated to improving access to a key basic need: affordable housing. Michael Topf: “With presence also in Panama and Colombia, we expect to increase our impact and strengthen our relationship with the group by exploring new transactions with their other subsidiaries.”