Infonavit’s Housing Loan Default Rate Surges to 34 Percent
By KELIN DILLON
According to new data from the Bank of Mexico, more than 34 percent of loans granted by Mexico’s Institute of the National Housing Fund for Workers (Infonavit) in times of minimum wage (VSM) have gone unpaid in 2023, an increase of 6.4 percent from March 2022 and 16.3 percent from March 2019.
The issue is tied to the Infonavit’s Shared Responsibility program from 2019, which ties workers’ mortgage loans to the Mexican peso at a fixed rate rather than the minimum wage index, meaning the loans are theoretically protected from inflation surges or fluxes in the minimum wage.
Infonavit is reportedly responsible for two million fixed mortgage loans at the moment, 25 percent of which are overdue on payment and another 205,000 that are in the foreclosure process.
“It is very serious, this means that they are stealing from workers who have not been able to exercise their credit or from workers who are saving to have more money for retirement; it is improper because that will impact lower performance in the housing sub-account,” a source with knowledge of the situation told daily Mexican newspaper Reforma. “It is a very delicate situation.”
The source went on to say that the situation not only affects workers who have defaulted on their loans but also workers who are set to begin financing their housing, as the defaulting workers technically owe other the workers contributing to the fund, not Infonavit, for the loans.
For the part of Infonavit’s Social Collection coordinator Pedro Valenzuel, the conditions under which the loans were granted made them unpayable for many Mexican workers and will go on to hurt their credit or potentially cause them to lose their houses, while the high default rate will subsequently hurt workers waiting to obtain a loan in turn.
International credit rating agency S&P Global Ratings has predicted Infonavit’s default rate to remain at a high level and continue operating at a weaker level than other aspects of the Mexican banking system.
“Our projections show that within the Infonavit’s portfolio there will continue to be a significant percentage of loans indexed to the Mexican minimum wage, which predict a rate of delinquency around 65 percent,” analyzed the agency.