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Evolution of Colombian Mortgage Market: From UPAC to UVR

Explore the transformation of the Colombian Mortgage Market from the UPAC era to the introduction of UVR, key trends, and strategic initiatives facilitated by the World Bank and IFC. Learn about the creation of the CHMC and recent achievements in the market.

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Evolution of Colombian Mortgage Market: From UPAC to UVR

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  1. Colombian Mortgage Market • Pricing Structure Early 70’s 70’s – early 90’s Mid 90’s – Late 90’s Dec 99 2000 2002 • UPAC was modified several times: • Linked to M.IR. • Capitalization of interests. • UPAC collapsed: • M.IR reached 60%. • Economic recession. • Capitalization of interests was declared unconstitutional. • UVR • Creation of UVR. • Linked to inflation. • Conversion of CAVs into Banks. • Loan balances recalculated with UVR. • Creation of UPAC (Unit of • Constant Purchasing Power).

  2. Colombian Mortgage Market • Mortgage trends Disbursements Stock Stock

  3. Creation of the CHMC • WB Strategy and IFC Role • Early Stages 1993-1998 • Support in the drafting of the new mortgage and capital market Law. • Intermediate Stages 1999- mid 2001 • Assistance in the implementation of the new Law. • Addressing the Constitutional Court ruling. • Break barriers between institutional investors. • Creation of an Ad-hoc Repo mechanism with CB • Creation of a Clearing Mechanism

  4. Creation of the CHMC • WB Strategy and IFC Role • Final Stages Late 2001-2002 • Creation of the CHMC in July 2001 • IFC’s equity investment of US$40 million and LCGF of US$100 million. • Attract new investors (AVVillas, Colpatria, CAF). • Assistance in risk management, technological development and organizational structure.

  5. Creation of the CHMC • WB Strategy and IFC Role • Recent Achievements 2002 • First mortgage issue in April 2002 • COP 464 billion (US$ 200 billion) • Demand 8.9 times.

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