PanAmerican BanCorp, a U.S. company that aims to take advantage of undeveloped niches in international mortgage banking, recently opened shop in Buenos Aires, Argentina.

"Many foreign firms are planning to capitalize on the tremendous opportunity available in Latin America," said John Schmitz, CEO of PanAmerican BanCorp. "We have moved quickly to establish our presence so that we can be at the forefront of those entering this dynamic market."

Argentina has adopted mortgage finance policies similar to those in the U.S and, while the market is still small by mid-1998 the mortgage debt outstanding to GDP ratio was just 2.65% it is developing rapidly. It has even seen a number of fairly successful securitizations from Banco Hipotecario, the country's first and only international issuer of MBS.

"From a financial and a macro-economic perspective, Argentina has everything in place for a developing market," said Steven Bernstein, a vice president at Cardiff Consulting Services, a California-based consultancy.

Prior to 1991 the Argentine mortgage market was virtually non-existent, as chronically high levels of inflation eroded real balances and resulted in a lack of long-term funds that could be used for housing. Consequently homes were purchased with cash and short-term personal loans.

However, the economic stabilization that began to take effect in the early 1990s made mortgage lending possible, with interest rates, which were in the four digits in 1990, down to single digits by 1994. Despite a hiccup caused by contagion from the Mexican financial crisis of December 1994 outstanding mortgage debt increased from $5.2 billion in 1994 to $9.4 billion in 1998. While on a per capita basis, mortgage debt grew over 90%, from $137 to $264, over the same period. TH

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.