National Housing Fund INFONAVIT May 2020
Revised Economic Outlook for 2020 Baseline (Strategic Plan)
Revised (Post-Covid)
• Subdued growth in 2020 following a moderate contraction in 2019. • Moderate consumption growth. • Protracted investment contraction throughout the year. • Slowdown in formal job creation. • Inflation rate slightly above target with persistent core inflation. • Primary public surplus but accompanied by a decrease in public expenditure and revenues.
• • • • • • • •
Sharp decrease in GDP growth. Generalized contraction in activity across sectors. Greater than expected contraction in investment. Severe negative impact on job creation. Consumption growth below trend. Moderate decline in the inflation rate. Decrease in public revenues. Moderate fiscal stimulus and monetary stimulus through lower rates and liquidity facilities. Monthly Job Creation
Macroeconomic outlook 2020
year on year change, in thousands
*Year-end **Central Bank target rate
Source: IMSS and INFONAVIT
2
Dec-20
Oct-20
5.00
Aug-20
7.00
-1,500
Jun-20
Target interest rate*,** (%)
-1,028.3
Apr-20
4.89
Feb-20
7.10
Dec-19
Interest rate, 28-day Cetes* (%)
-1,000
Oct-19
-1,028.3
INFONAVIT has implemented a large package of measures which is robust enough to support 1.2 million of unemployed. Aug-19
452.1
-500
Jun-19
Employees enrolled to IMSS (y/y, in thousands)*
0
Apr-19
3.0
Feb-19
3.3
Dec-18
Annual inflation rate* (%)
500
Oct-18
-7.6
Aug-18
1.8
Jun-18
Real GDP growth rate (%)
1,000
Apr-18
Revised forecast (May 2020)
Feb-18
Baseline forecast
Indicator
INFONAVIT Policy Response: Protect mortgage payments and employment
Mortgage holders
On April 15, INFONAVIT launched a set of measures aimed at protecting the financial solvency of families, for employees who lose their jobs or whose income is reduced:
Unemployment insurance Up to 7,326 million MXN (305 million USD) Will cover up to 3-month mortgage payments and the benefits are obtained without co-payments.
As of May 8th, 92,596 borrowers have been beneficiaries of the financial aid
Job loss universal contingency fund
29,379 borrowers
Credits originated before 2009
Payment Protection Fund (PPF)
9,995 borrowers
Credits originated since 2009
Payment tolerance (PT) (No capital or interest will be charged)
12,145 borrowers
The deferral program will allow borrowers to postpone 3 months of the mortgage payments. It’s an effective balance freezing.
Combination PT + PPF*
41,077 borrowers 3
*2 PPF months + 1 PT month; 1 PPF month + 2 PT months; No PPF + 3 PT months.
INFONAVIT Policy Response:
Firms
Protect mortgage payments and employment
On April 2020, Infonavit launched a nationwide facility to allow firms to postpone housing payroll contributions. The program´s main elements are: Distribution of firms by size (1st quarter 2020)
Deferred payroll contribution program (emphasis on small and medium – sized firms) • Exemption of penalties or fines • After the deferral, firms will be offered payback programs for 12 months.
Small and medium sized firms (<250 employees) Deferral of 4 months of payroll contributions (5% of monthly payroll). There are around 950,000 firms that are elegible.
Larger firms (>250 employees) Deferral of 2 months of payroll contributions for larger firms which apply to the program (13,000 firms elegible)
5 to 50 employees, 30% Up to 5 employees, 64%
51 to 250 employees, 5%
> 250 employees, 1%
As of May 11th, beneficiaries in these programs are: • 12,734 small and medium firms • 627 large firms • 27.5 USD million of granted liquidity for firms. • 940,000 Jobs 4
Long Term Programs focused on household needs These programs are part of the Strategic and Financial Plan 2020-2024; due to the sanitary contingency, their implementation will be accelerated. Responsabilidad Compartida
Home-Construction Mortgages
It is a debt relief program for good and low incomeborrowers which includes a discount on the balance and restructuring credit in Times Minimum Salary (VSM) to pesos with a fixed rate of 8.5% and no annual increase in payment.
Will be a crucial strategy in this context, not only for INFONAVIT but for Federal Government. This strategy represents an option to reactivate the economy, providing liquidity to low-income families who can build their own homes, triggering the placement of credits and restoring the dynamism of the construction sector.
Lower rate in mortages
Home-Improvement Credits Boost
New solution that reduces the financial cost of credit in pesos through decrease in interest rate (from 12% to 10.9%). Furthermore, it is a more transparent product, since the credit agreement includes all the alternatives for social collection to which the borrower is entitled.
The maximum loan amount of Mejoravit Credit will be expanded (60,00 to 125,000 MXN), so that the beneficiaries directly acquire materials and contract builders, which will allow them to improve or extend their home.
5
Reach relevant mortgage origination goals The Strategic and Financial Plan 2020-2024 sets a placement goal of 529,514 credits in 2020. However, the effect of the health contingency, particularly the expected loss of employment and the fall in economic activity had an impact in that goal. â&#x20AC;˘ Without measures, credit origination could have gone down to 287k, a reduction of 45%. â&#x20AC;˘ Thanks to the application of measures to face the contingency, the cumulative placement of 2020 is estimated to amount to 500k credits, a reduction of only 5.5% Mortgage loans (new and existing housing) and loans for improvements placement 60,000
Mortgage portfolio
50,000
2020 with measures: 500,001 credits
40,000
2020 agree to POA: 529,514 credits Real Mortgage portfolio 2019: 521,961 credits
30,000 20,000
2020 without measures: 287,357 credits.
10,000 Ene
Feb 2019
Mar
Abr
2020
May
Jun
Jul
Ago
2020 without measures
Sep
Oct
Nov
Dic
2020 with measures 6
*POA: Annual Operating Program