In Latin America, the last months have shown significant benefit to the country with improving housing markets. Part of this has been due to the expansion of credit markets within these emerging countries. Yet many fear that the subprime market will cause the Latin American trends to falter – this has not been seen as of yet.
In Mexico, the increased amount of options for mortgaging properties has allowed for more affordable solutions. There is a large market for lower and middle income housing here, which has shown considerable growth. This was due to the creation of residential mortgage securities here back in 2003. In the last quarter of 2007, these insurers helped to provide US $1.5 billion worth of new mortgage loans.
That does not mean that there will be no effect from the subprime lending industry. Most investors believe that locations like Mexico will be hit by the slowing US economy, which would drive down the purchases of foreign produced products.
The US housing market and the credit crunch, which will help to tighten the belts of many lenders, have not hit Mexico or other Latin American countries just yet. Here many homes cost about US $40,000 and are very small. One of the factors helping to avoid the small fall as seen in the US is that Mexican lenders do not provide loans like this to borrowers that have poor credit histories.
