Argentina Mortgage Market Set for 'Revolution,' Elsztain Says

  • Banco Hipotecario's mortgage market to double on new measures
  • Use of inflation-linked accounting unit to promote lending

Argentina’s mortgage market is set to boom under President Mauricio Macri as he moves with the central bank to reform the economy, according to the chairman of Banco Hipotecario SA.

Lending to home buyers will double at state-backed mortgage bank Banco Hipotecario as demand rises with a more stable currency, Eduardo Elsztain said in an interview at the World Economic Forum in Davos, Switzerland. Argentina’s mortgage market was stunted by soaring inflation that made banks reluctant to approve long-term loans at fixed rates and dissuaded consumers from floating-rate debt on concerns that costs would soar.

Since taking office Dec. 10, Macri has implemented a slew of changes aimed at jump-starting a stagnant economy, including letting the currency float freely after years of tight controls and intervention from the central bank. Central bank President Federico Sturzenegger announced a plan Dec. 14 to implement an inflation-linked accounting unit similar to the one used in Chile for large scale loans while vowing to attack double-digit inflation.

"These measures in Argentina are going to be a revolution for the mortgage market," said Elsztain, who is also chairman of real estate firm IRSA and agricultural company Cresud SACIF. "There’s a big class of Argentines that hasn’t had access to mortgages for the last three decades. The room for growth in this market is enormous."

A clampdown on inflation would create opportunities for Argentina’s middle class to access mortgages, he said. Home purchases have traditionally been done in cash.

The central bank press office said the inflation-linked accounting unit is still being designed and that there are no dates set for when it will be approved or implemented.

Argentina’s new policy makers, including Sturzenegger and Finance Minister Alfonso Prat-Gay, have pledged to make fighting consumer-price increases their top task. The Finance Ministry laid out inflation targets last week including a plan for annual consumer price increases to slow to 5 percent by 2019 from an estimated 27 percent in 2015.

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