Country Profile

Source: EFAM 2012 - Guayaquil, Ecuador

Ecuador has a population of 14.7 million people of whom 67% live in urban areas. The urban population growth rate is 2 percent whereas the total population growth rate is 1 percent (WDI 2010).

In Ecuador the largest provider of mortgage loans is the Bank of the Ecuadorian Institute of Social Security (BIESS). BIESS was created in 2009 by the national government. Its goal is to fulfill the constitutional mandate in President Correa’s 2008 Constitution to have a public financial institution dedicated to making investments to enhance the public good. The bank now accounts for $766 million (or 54%) of Ecuador’s $1,420 million total home mortgage loans outstanding at the end of the year (Central Bank of Ecuador). After rapid growth in its first years BIESS’ share of the total home mortgage market has leveled off.

Private sector mortgage lending has also grown rapidly over the past decade. In 2003 $250 million in home mortgage loans issued by the private sector were outstanding. In 2011 the private sector accounted for $656.9 million of the total home mortgage loans outstanding, still less than BIESS but nearly half of the market. Home mortgage loans account for a low percentage of total loans, accounting for 9.8% of total credit of the private financial sector in 2011 (Association of Private Banks of Ecuador).The private financial sector relies on retail deposits with mortgage bonds or securitization both remaining nearly nonexistent in the country. The maximum loan-to-value ratio offered is 70% at private banks to prevent excessive borrowing and limit risks(Association of Private Banks of Ecuador).

In May 2012 Ecuadorean lawmakers passed a bill allowing borrowers to cancel outstanding debts by forfeiting their homes. This move is strongly opposed by the private banks which fear it could create a culture of not paying debts (Association of Private Banks of Ecuador). The new rules would apply to homes valued up to $146,000 as well as automobile loans worth up to $29,200 (Bloomberg).