Mexico gets green mortgages
Mexico’s Hipotecaria Vertice, a mid-sized real estate lender, is set to offer green mortgages. The new product, aimed at lower-income borrowers, offers homebuyers incentives to opt for properties with eco-friendly features in return for interest-rate savings.
Vertice will roll out the green mortgages within the next three months.
Vertice calls what it has come up with in conjunction with specialized developers a green kit. Houses with the green kit – features promoting energy efficiency and water conservation – are eligible for the green mortgage.
“The idea is that for relatively little money you can add certain energy-efficient cost savings to a home that will increase its value,” says Samuel Suchowiecky, Vertice’s chief executive. “We are adding another feature to give consumers a benefit in terms of interest rate, which we hope will incentivize the developers and home buyers to direct their attention to these kinds of homes.”
Ultimately, homes with the green kit should be more valuable than those without and deliver savings on energy expenditure to the homeowner. And although these homes might be more expensive than conventional ones, the savings made on energy bills should make up for the difference.
“We’re not requiring major changes in the home to qualify,” says Suchowiecky. “The idea is to keep it simple.”
The green kit focuses on three items, solar water heaters, water conservation features and energy-efficient light bulbs. The developer or homebuyer needs to equip the house with these features to qualify for these loans.
“Not only will [the green-kit] improve the energy efficiency and natural resource conservation but from a business point of view it actually improves the credit of the underlying borrower as they are able to make some savings each month,” says Violeta Velazquez, an investment officer at the International Finance Corporation in Washington, DC. The IFC has been a key finance provider to Vertice, most recently investing $6 million for a 15% equity stake as well as a $40 million-equivalent local-currency revolving credit facility. This investment and facility are earmarked for Vertice’s green kit initiative and other financial products aimed at lower-income borrowers that it is developing.
“We will be designing other products focused on other parts of the market that are growing,” says Suchowiecky. “One is focused on households led by women, which is a growing part of the population and as the demographics of Mexico change. It’s a niche we can direct products to, also young people and young couples.”
IFC has also been active in funding environment-friendly housing construction. Most recently, it made a $22.5 million investment – $10 million in equity and $12.5 million [in what?] in Vinte, a Mexican homebuilder. Like Vertice, Vinte targets the lower-income segment of the market, emphasizing eco-friendly and technological features (such as wireless internet access) in new homes. The IFC investment will be used to purchase land and to fund research and development. The company is a relatively small player in the Mexican market, building roughly 3,000 houses a year.
“Being a small company, we are very active in the research and design of sustainable home features,” says Sergio Leal, chief executive at Vinte. “Later companies haven’t really embraced these ideas yet.”
In addition to sustainable features, Vinte focuses on the presence of computers with internet access in each home it builds. “We don’t sell any houses without at least one computer,” says Leal. “Without access to computers and the internet, we won’t be able to break the poverty cycle.”