Haiti

Country Profile

Haiti has a population of 9.9million people, of which 48 percent live in urban areas. The earthquake that struck Haiti on January 12, 2010, killed more than 220,000 people, injured more than 300,000, and left more than 1.5 million homeless, with the majority of victims relocating to 1,300 temporary camps in and around Port-au-Prince.[i] Approximately 105,000 houses were completely destroyed and more than 208,000 were damaged, and approximately 25 million tons of rubble covered the earthquake zone.[ii] Housing represents, therefore, a huge challenge as Haiti moves from the post-disaster relief and recovery programs into a medium-term reconstruction phase. With donor funding decreasing, the new government intends to leverage people’s own contributions to solve their housing problems. Housing finance, whether mortgage or micro-finance, will have to play a critical role in new housing construction, home rebuilding, and repair.

However, the financial sector in Haiti is underdeveloped, with a ratio of private-sector credit to GDP of only 12 percent. This is among the lowest in the world. The mortgage system was small in the pre-disaster years and has since decreased by 14 percent to a mere $68 million of outstanding mortgages, one percent of GDP and only 8 percent of the total loan portfolio of banks.[iii] Developer finance and finance for rental housing is equally limited. The banking system is highly liquid, with assets of $3.7 billion and a loan portfolio of only $822 million. However, banks are reluctant to make mortgage loans because incomes of the great majority of the population are unstable and collateral is unreliable, resulting in high perceived credit risk. There are no credit bureaus in Haiti. In addition, the pool of qualified borrowers is limited due to low incomes. Transaction costs on mortgage lending are high (land transfer taxes and mortgage registration taxes run between 3.5 percent and 7 percent each, on top of insurance and bank fees), making affordability problems even worse. Mortgage rates on 20-year adjustable rate loans were on average 10 percent to 12 percent in July 2011 and down payments were typically 20 percent.

There are nine banks operating in the mortgage sector in Haiti. Sogebel, the only mortgage bank, is the largest lender, with about 29 percent of total mortgage lending in the country. As of March 2011, it had 650 mortgage loans for a total outstanding of $22.8 million. Unibank and Scotiabank were the next largest housing lenders. The two state-owned banks are making efforts to expand mortgage lending, particularly for civil servants and other salaried workers.

Credit Unions and microfinance lenders offer home improvement loan products—typically three- to five-year loans of $2,500 to $5,000. Interest rates are 18 percent to30 percent, depending on the guarantees offered. The reach of these programs has been limited, however.[iv]

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[i]Oxfam—Haiti Progress Report 2010, January 6, 2011
[ii] Ibid
[iii] USAID, Support Development of a Government-of-Haiti-Led Action Plan for Expanding the Availability of Housing Finance, Assessment of Options for Stimulating Housing Finance in Haiti, Draft August 2011
[iv] Ibid