Mexican Homebuilders are Back in the Dumps Again this Week Pan Kwan Yuk - FT.com
go to original March 13, 2013

Barely a week after shares in Mexico’s leading homebuilders shot up on the back of a quasi-bailout – the stocks are back in the dumps again this week.

The reason? Investors are having second thoughts over whether plans announced by the Mexican government to guarantee as much as 30 per cent of losses on loans made by commercial banks to the country’s homebuilders would really do much to ease the sector’s financial woes.

“That was an overreaction,” Carlos Hermosillo, an analyst with Grupo Financiero Banorte told Bloomberg. “The guarantee program is good, but it does not solve the problem.”

[...]

A move by the government to use its subsidised housing programme to promote the construction of apartment buildings in cities, combined with a shift by Infonavit, the state mortgage lender, to increase lending for the purchase of used – rather than new – houses has created a perfect storm for the country’s homebuilders, whose existing land banks are primarily geared towards the construction of single homes in city suburbs.

Read the whole story at FT.com

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