Argentina Tries to Build a Mortgage Market From Almost Nothing
Markets
Key Facts
—The push. Economy minister Luis Caputo is urging banks and brokers to pool capital into a real-estate fund to revive home lending.
—The model. The idea resembles a real-estate investment trust, or REIT, spreading risk across several financial players.
—The problem. Most Argentine home buyers still pay cash, and mortgage-backed sales fell more than a third early this year.
—The pain. Construction has lost about 60,000 payroll jobs since President Javier Milei took office.
—The stakes. A working housing-finance market would help Milei before his re-election bid next year.
Argentina is trying to conjure a mortgage market almost from scratch, in a country where most people still buy homes with suitcases of cash. The government sees it as key to reviving a battered construction sector.
Economy minister Luis Caputo has been talking with banks and brokers about creating a real-estate fund where several financial players pool capital. The government could then leverage that pool with money from multilateral institutions in a public-private partnership.
The structure echoes a real-estate investment trust, the vehicles known as REITs in the United States. The aim is to spread risk across a group of investors rather than leaving it on any single bank’s balance sheet.
Caputo has been blunt about what he wants. He has told banks and brokers to get six or seven of them together to form a fund, promising the state could triple or quadruple it with multilateral funding.
Why Argentina’s mortgage market barely exists
Decades of high inflation destroyed the basis for long-term lending. When prices rise fast and unpredictably, banks cannot price a thirty-year loan, and savers will not lock money away, so home finance never developed.
Mortgage-backed sales briefly surged early in Milei’s presidency, then evaporated. The government stemmed a currency run in part by pushing interest rates above one hundred percent, which priced borrowers straight out of the market.
The numbers show the damage. In the first five months of the year, the number of mortgage-backed home sales was down more than a third compared with the same stretch of the prior year.
A structural quirk makes it worse. Most bank deposits in Argentina sit in very short-term accounts of under sixty days, leaving lenders without the long-dated funding a mortgage book requires.
The construction jobs behind the mortgage market push
The urgency is political as much as economic. Construction is a major employer, and the sector has shed roughly 60,000 payroll jobs, about fourteen percent of the total, since Milei took office and slashed public works.
Government surveys show construction employers still plan more firing than hiring in the coming months. Reviving private home building is one of the few levers left to put those workers back to work.
The timing points to next year’s vote. Milei faces a re-election bid, and a visible recovery in housing and jobs would blunt one of the sharpest criticisms of his austerity programme.
Private banks have floated older tools too, such as interest-rate swaps that were proposed in the past but never implemented. The common thread is finding a way to fund long loans in a country wary of them.
Officials are also eyeing existing pools of money. Among the options under discussion are a fund run by the social security agency and a Labour Assistance Fund created by a Milei reform this year to ease severance payments.
The government wants part of the answer to come from market brokers and their closed-end funds. The pitch is that dollar-denominated lending, in particular, could grow through capital markets rather than traditional bank deposits.
What a foreign reader should watch
The signal is disinflation. A mortgage market only becomes possible if inflation keeps falling and rates come down enough for borrowers and lenders to meet in the middle.
As one local consultant put it, mortgage credit in Argentina is still just beginning to crawl and has not started walking. For investors, the fund is a bet on whether the country’s hard-won stability can finally reach ordinary households.
What is the government proposing for the mortgage market?
Economy minister Luis Caputo wants several banks and brokers to pool capital into a real-estate fund, which the state could then leverage with multilateral funding in a public-private partnership. The structure resembles a real-estate investment trust and is designed to spread the risk of home lending across many investors.
Why is it so hard to get a mortgage in Argentina?
Decades of high and unpredictable inflation made long-term lending almost impossible, so most home buyers pay cash. Most bank deposits are also very short-term, leaving lenders without the long-dated funding a mortgage book requires.
Why does this matter politically for Milei?
Construction is a major employer and has lost about 60,000 payroll jobs since Milei took office and cut public works spending. Reviving home building through a functioning mortgage market would help create jobs ahead of his re-election bid next year.
Frequently Asked Questions
What is Argentina's economy minister proposing to revive the mortgage market?
Economy minister Luis Caputo is urging banks and brokers to pool capital into a real-estate fund, similar to a REIT, to spread risk across multiple financial players rather than leaving it on any single bank's balance sheet. He has told banks and brokers to get six or seven of them together to form a fund, with the government potentially tripling or quadrupling it using multilateral funding through a public-private partnership.
How do most Argentines currently buy homes?
Most Argentine home buyers still pay cash, and mortgage-backed home sales fell more than a third early this year. Argentina is effectively trying to build a mortgage market almost from scratch given this cash-dominant reality.
What has happened to construction jobs since President Milei took office?
The construction sector has lost approximately 60,000 payroll jobs since President Javier Milei took office. Reviving the housing-finance market is seen as key to helping the battered construction sector and supporting Milei ahead of his re-election bid next year.
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