Housing Finance for Everyone - Increasing Access to Finance for Better Homes

Since 2018, the LFS housing finance team has worked for an international housing donor / promotor in Central Asia, Central Europe, and the Middle East. The goal was to help with improving the technical set-up of MFIs in housing finance, to equip them to cater to low-income people who are in need of home improvement. Through these projects, tailor-made financial products were made accessible for clients to either build their home incrementally or upgrade the living conditions in various ways.  

Partner institutions had two options: either to improve their housing finance set-up or to start housing finance from scratch. As part of the work in some projects, market research was done to establish the framework for the interventions and to precisely develop the tools for targeting the underdeveloped parts of the housing market. 

Improvement of living conditions for low-income people has gained new urgency with fast growing populations in many developing countries. In a number of projects, the LFS housing team has worked with institutions to refine the existing housing finance. In the framework of these projects, the consultants reviewed supply and demand for housing finance, analysed the product offers, the sales channel strategy, the efficiency of the lending processes, and the marketing approach. Recommendations were developed concerning product design, the use of channels (including digital ones), and staff training in housing finance.  

The training of staff included relationship managers, heads of lending departments, and senior management, and focused on sessions with topics such as methods of finance for various forms of home improvement like incremental building and upgrading of homes. Furthermore, construction technical assistance for building efforts, differences in lending technology, and sales techniques for successful acquisition of clients were all part of the training curriculum. In parts of the projects, the Customer Value Proposition was analysed and improved in workshops using the CVP canvas method. 

In the projects, energy efficiency and green finance elements were included to not only improve the housing conditions but also enhance the climate impact of the suggested housing improvements. 

In all projects, MFIs gained valuable insights and significant refinements to their existing capabilities in housing finance. The results of the market research refreshed their views on what customers want and what the competition is capable of. The refinements of the institutional set-up helped the MFIs to develop a more focused approach to housing finance, introduce new ways of attracting customers, and become more efficient in credit operations. Strong cooperation between the consultants, the MFIs, and the housing finance promotor resulted in the successful outcome of the projects, and in additional ideas on areas to be improved further in the area of housing finance.