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Housing Finance Mechanisms in Chile

This publication evaluates the housing finance mechanism in Chile, with special attention to the issues of affordability, efficiency, effectiveness, and stability. Over the past three decades, the impact of the Chilean government’s social housing policy on the availability and affordability of housing has been substantial, drastically improving access to low and middle-income level households. During the same period there has been a consolidation of the market economy in the country, accompanied by a deep reform of the financial markets, together with more affordable access to long-term credit by households. All this has resulted in the substantial erosion of the historically large housing deficit.  

A much more dynamic construction sector has contributed - complementing an aggressive social housing policy receiving large fiscal support - to a robust supply of new housing in the marketplace. As reflected in available statistics, gains in income levels, combined with easier family access to reasonably priced housing finance in recent decades, has resulted in much improved living conditions for large segments of the population, benefiting households across the income spectrum. One of the objectives of this report is to share the Chilean experience and some of the lessons learned, particularly those that may be replicable in other countries in the developing world.