Skip to main content

IDB fund supports pilot project on transnational mortgage loans for Salvadorans living in the United States

The Inter-American Development Bank’s Multilateral Investment Fund (MIF) will support with up to $5,250,000 in financing a pilot project with Banco Agrícola of El Salvador to develop transnational mortgage loans for Salvadorans living in the United States who want to buy real estate in their homeland.

Some 2.6 million Salvadorans live in the United States, with large concentrations in California, New York, Maryland and Virginia. These migrants sent a record $2.8 billion in remittances to El Salvador last year.

Banco Agrícola estimates that some 500,000 migrants could potentially buy houses in El Salvador. It has already made around 400 mortgage loans to Salvadorans living in the United States, but those operations required borrowers to travel to their homeland, adding to their transaction costs.

The MIF-backed pilot project will assist Banco Agrícola in developing a new transnational mortgage loan that will not require migrants to take a trip home to formalize the operation. The bank will also make agreements with housing developers in El Salvador and housing brokers in the United States who will sell new or existing homes to migrants.

The MIF financing consists of a loan of up to $5 million to Banco Agrícola and a $250,000 technical assistance grant. The loan will fund the new transnational mortgage loans, which will be offered through the bank’s network of 23 money transfer agencies and three banking branches in the United States.

The grant resources will match Banco Agrícola’s investments in a software system to manage the transnational mortgage loans; training for bank officers, housing developers and brokers; a marketing strategy to promote Salvadoran housing developments in the United States and a study of the demand for other remittances-related financial products such as microcredit, among other activities.

The MIF, which promotes private sector development and investments in Latin America and the Caribbean, expects the pilot project to help more Salvadoran migrants build assets in their homeland and mobilize a greater part of their savings through formal financial institutions, leveraging the development impact of their remittances.

The project reflects the principles of Opportunities for the Majority, an initiative launched earlier this year by the IDB to help low-income people in Latin America and the Caribbean gain access to products and services that can assist them in accumulating assets and improving their living standards.

Jump back to top