Chile proposes Capital Markets Reform to lower mortgage costs

The Chilean government is advancing a Capital Markets Reform aimed at improving housing access and lowering mortgage costs. A central component of the plan is the creation of the National Housing Fund (FONAVI), which will be managed by BancoEstado. FONAVI is expected to receive an initial injection of $500 million, with the potential for up to $2 billion in additional state funding, to acquire, finance, and refinance mortgage portfolios through competitive processes.

Another key measure is the Voluntary Housing Savings (AVV) program. This initiative allows citizens to save 7% of a property's value over at least 30 months, after which the state provides an additional 3% contribution to help cover the down payment. This applies to new or used properties valued up to 6,000 UF.

Jaime Ugarte, Executive Director of Colliers, noted that these reforms address major barriers such as the difficulty of accumulating down payments and securing dividends compatible with household incomes. Colliers suggests that the combination of FONAVI, the AVV program, and the electronic transfer of endorsable mortgage mutuos could increase liquidity, enhance competition, and potentially reduce mortgage rates by up to 100 basis points.