New Business Call to Action member’s mortgage loans will reach 20,000 households in Colombia by 2020

Colombia’s Credifamilia has joined the Business Call to Action (BCtA) with a commitment to expand its successful low-income loan portfolio by extending $240m (£153m) in home mortgages to at least 20,000 households in six urban areas which will house 78,000 people by 2020. The program includes loans for 4,000 informal households who traditionally have had difficulty in accessing mortgage loans.

The company aims to address Colombia’s chronic housing shortage by developing home-loan programmes that target low-income families (40% of which are headed by women), who have limited access to traditional banking services. Credifamilia anticipates revenues from its low-income mortgage portfolio to increase five-fold to $30m (£19m), its staff to double to 300 and more than 15,000 construction jobs to be created over the next five years. Credifamilia is the first Colombian company to join BCtA.

“For Colombians at the lowest end of the earning spectrum, a house is much more than a roof over their heads – it is a life project that improves the quality of life, economic prospects and education opportunities,” stated Juan Sebastian Pardo-Lanzetta, Credifamilia’s founder and chief executive officer. “From its founding, Credifamilia has pioneered a specialised, tailored approach to serving the mortgage needs of Colombia’s most vulnerable communities – providing an entry point to basic services and resources. We are honoured to have our work recognised by the Business Call to Action and to become a member of this prestigious organisation.”

A shortage of housing is a chronic problem for Colombia, and as recently as 2015, mortgage lending comprised only 5.5% of its GDP – one of the lowest in Latin America. The problem is particularly acute in Bogota and the country’s other growing cities. It has led to overcrowding, high rent burdens, housing insecurity and deteriorating housing conditions. For this reason, Credifamilia focuses on the country’s urban areas and has already expanded from its home office in Bogota to the country’s other largest cities – Medellin, Cali, Bucaramanga, Barranquilla and Pereira.

Credifamilia devotes 40% of its product portfolio to under-served households earning between one and two minimum wages (between $8 (£5.11) and $9 (£5.74) per day). Most of its loans are 15 years in term. The company has developed a number of dynamic methods for expanding its client base and mitigating risk. These include partnering with supermarkets and pharmacies as payment networks so clients can pay monthly installments near their homes, educating prospective home-buyers with information and technical advice on the home buying process, and individual home appraisals to ensure construction quality and fair market value. Credifamilia is also experimenting with an online sales channel, which has been popular among potential clients who feel intimidated by the traditional mortgage process.

In 2015 the Inter-American Development Bank’s Opportunities for the Majority division increased its approved funding line for Credifamilia to grow its low-income housing mortgage program which will support the institution’s loan origination in the upcoming years.

“Safe, affordable housing is critical for improving lives and livelihoods among low-income populations,” said Suba Sivakumaran, BCtA programme manager. “It provides important, life-changing conveniences such as running water and sanitation, improved access to education and stable employment – all components of the new Sustainable Development Goals. We are pleased to welcome Credifamilia as a member of the Business Call to Action and look forward to working with the company to ensure the success of this important initiative.”

Watch: Credifamilia’s Housing Solutions

Content on this page is provided by Business Call to Action, and originally appeared on the The Guardian Business and the Sustainable Development Goals Hub