- Increasing access to home improvement financing for the low income segment in the Dominican Republic
- Improving the housing quality for low income families in the Dominican Republic
- Addressing the housing deficit issue
In the Dominican Republic the access to formal credit is insufficient, including home improvement financing. Moreover, information asymmetries make the already limited housing credit even harder to access for low income families, since the majority of such families have no credit history and traditional credit scoring methodologies are not applicable. These conditions force low income families to turn to informal methods to build their homes, leading in turn to qualitatively deficient houses.
Banco Ademi created the CrediMejoras product to extend the access to home improvement financing to segments of the population that are excluded from the mortgage market. To make the on-lends to the low income families possible, MOJ provides financing to Banco Ademi.
CrediMejoras is tailored to the low income segment in terms of the loan amount, the monthly installment amount, acceptance of alternative proof of home ownership, and the inclusion of construction technical assistance and financial education. The bank’s origins in microfinance, its comprehensive network and its mobile payment and disbursement platform are key factors for the success of the project.
Through the program the low income segment has additional access to medium to long term credit. The financing allows low income families to complete their unfinished houses or to replace substandard construction materials and thus improve their living conditions. In 2015, IDB approved a $5 million loan to Banco Ademi that aims to offer access to home improvement financing to an estimated 5,000 low income families.