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MIGA’s goal is to promote foreign direct investment into developing countries to support economic growth and more.

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Learn about the progress MIGA is making in its mission to support economic growth, reduce poverty and improve people’s lives.

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Press Release

Peru’s Flagship Green Mortgage Program Gets MIGA Boost

WASHINGTON, D.C., September 20, 2022 — The Multilateral Investment Guarantee Agency of the World Bank Group (MIGA) has issued guarantees to J.P. Morgan Chase Bank, N.A. against the risk of non-payment of a loan of up to $290 million to Fondo Mivivienda S.A. (FMV), a state enterprise owned by the government of Peru, for a period of up to 10 years. This guarantee is the first of its kind for a financing in Peru.

FMV will use the funds to provide financing to commercial banks offering mortgages as part of its green mortgage program, “Mivivienda Verde.” Considered a flagship program in Peru, Mivivienda Verde provides financing for the acquisition of properties certified as sustainable green housing. The program has increased the demand for sustainable housing in Peru.

By supplying this financing, FMV will support the development of the green mortgage market by commercial financial institutions, which in turn will help promote the “greening” of the Peruvian financial sector. It is expected that with these new funds, an additional 7,000 mortgages will be made available for social and green housing in a country where there is a significant housing deficit.

MIGA support for FMV will foster and support a green economic recovery following the negative effects caused by the COVID-19 crisis,” said Hiroshi Matano, MIGA Executive Vice President.In addition, we are pleased to enable FMV to obtain long-term financing at competitive pricing from a leading global lender and to help Peruvians build wealth through home ownership.”

FMV was established with the goals of providing access to housing to middle- and lower-income working families and encouraging savings through the creation of financing mechanisms with the participation of the private sector. Mivivienda Verde provides mortgage lending based on the Peruvian sustainable building code and includes water and energy savings, biking spaces, and building strategies adapted to local bioclimatic conditions. The program complies with the minimum requirements of an eligible green building: reduction of 20 percent in energy use, water use, and embodied energy in materials as benchmarked against local building standards.

This is the first FMV operation with a MIGA guarantee in Peru, and it is a very important event for our institution and the country. This agreement is part of the financial sustainability strategy that FMV has been carrying out, which seeks to identify various financing alternatives that offer favorable conditions to tend to credit placements in the coming years, especially sustainable housing,” said Jose Carlos Forero, FMV’s CEO.

The president of the FMV Board of Directors, Pedro Arroyo Marquina, emphasized that “Thanks to this collaboration, we have been able to promote sustainable social housing with innovation and technology consistent with Peru’s national policy. At the same time, real estate developers, financial entities, and families have been made aware of their important role in the fight against climate change.”

Peru is experiencing a housing deficit estimated at 1.9 million units. That includes houses that are not able to meet basic housing needs in terms of construction deficiencies and houses that are overcrowded or have no access to electricity, water, and sanitation. Compounding the situation, access to mortgages is constrained by the lack of formal jobs (around three-quarters of Peru’s labor force holds informal jobs) and bank accounts (only 42 percent have bank accounts.)

The majority of existing mortgage holders are considered middle-income or vulnerable middle-income households, with only 6.2 percent of the population having an outstanding mortgage. Housing loans represented 14.5 percent of overall credit in the country as of February 2022. Around 42 percent of the Peruvian population is considered vulnerable. They are people who, while not in poverty, are susceptible to events such as a bad harvest, lost job, illness, unexpected expense, or economic downturn that could easily push them into poverty.

The MIGA-guaranteed loan will support the Mivivienda Verde inclusive business model aimed at social housing. The expanded program will allow the middle and vulnerable middle-income households to improve their quality of life by purchasing houses that are not only green, but also provide access to electricity, water, and sanitation. Just as important, homeownership will allow these households to build wealth and have the potential to leverage their houses to increase their access to financial services, including loans through home equity. 

“This important financing will support the expansion of FMV’s green mortgage lending program, “Mivivienda Verde,” and ultimately support green and affordable housing in Peru,” said John Meakin, Global Head of Export & Agency Finance at J.P. Morgan.  

“J.P. Morgan is a market leader in sustainability-linked finance, and this financing builds on the firm’s strategy to support the transition to a lower-carbon economy, including a 10-year target to finance and facilitate $2.5 trillion to contribute to sustainable development, including $1 trillion for green initiatives. Additionally, achieving high client impact in close collaboration with MIGA, a critically important agency for economic development, remains core to our global approach.”

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About FMV

The Housing Promotion Mortgage Fund, Fondo Mivivienda, was created in 1998

to facilitate access to adequate, single-family housing, particularly for low-income families, through the concerted management between the government of Peru and the financial and real estate sectors, boosting their development.

From the creation of “Mivivienda Verde” in March 2015 to June 2022, a total of 24,198 credits have been granted with a green bond, disbursing 120 million soles and generating a significant impact on the promotion of sustainable housing in the country.

In addition, an offer of 86,210 certified eco-friendly units has been registered to date, distributed in 449 projects nationwide. Seventy-five percent correspond to homes located in districts of Metropolitan Lima and Callao and 25 percent in the rest of the country, where regions such as Lambayeque, Piura, Arequipa, Ica, and La Libertad stand out.

 

About MIGA

MIGA was created in 1988 as a member of the World Bank Group to promote foreign direct investment in emerging economies by helping mitigate the risks of restrictions on currency conversion and transfer, breach of contract by governments, expropriation, and war & civil disturbance; and offering credit enhancement to private investors and lenders.

Since its creation, MIGA has issued nearly $70 billion in guarantees across 122 developing countries in support of nearly 1,000 projects.

 

Contacts:

In Washington:  

Elizabeth Howton, (202) 458-5922, ehowton@worldbankgroup.org

 

For more information, please visit: https://www.miga.org

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