INFONAVIT: Worker Housing in Mexico
Bordering the Future
In Mexico, the National Workers Housing Fund Institute--or Instituto Nacional para el Fomento de la Vivienda de los Trabajadores, INFONAVIT--serves as the major government housing assistance agency. The housing fund, started in 1972, is designed to help Mexican workers purchase homes. Under the program, Mexican employers must contribute 5 percent of their payroll to the fund, up to a maximum of 10 times the statutory minimum wage. The contributions make up the national housing fund, used by INFONAVIT to award 30-year mortgage loans, with an average interest rate of 6 percent plus an adjustment for the annual increase in the minimum wage.1
While contributions to the funds are made on behalf of Mexican workers throughout their working years, many workers do not see a direct return. Because there is such a high demand for housing in Mexico, only three in 10 families receive subsidized housing.2 Unlike in the U.S., private mortgages are not a standard vehicle for homeownership, and high, fluctuating interest rates make loans unattainable for many. INFONAVIT, which historically has financed one-third of the affordable housing market in Mexico, gradually became responsible for 43 percent of this housing market after the peso devaluation of 1994.
INFONAVIT's concept of "worker housing" led Mexican companies and maquiladoras to take a more active role in providing affordable housing. In Monterrey, major industrial companies such as Cemex have pledged to support housing construction for Mexican workers. Cemex, one of the world's leading cement manufacturers, has agreed to refund a percentage of proceeds from each ton of cement purchased for housing construction by INFONAVIT. The refund goes into a newly established trust dedicated to housing construction. The agreement was formalized in 1995.
In 1996, Sony Magneticos de Mexico announced a collaborative effort with Mexican home builder Grupo Condak, U.S.-based Pulte Corp., and INFONAVIT to build 500 homes, primarily in Nuevo Laredo, for Sony employees. Another maquila, Fender Musical Instruments in Baja California, plans to provide subsidized housing for its workers as well, beginning in 1998. Unlike most maquilas, where turnover can be as high as 100 percent, Fender enjoys a turnover rate of only 5 percent. The practice thus offers sizable benefits for maquila employers as well as employees.
The Mexican worker housing program may serve as a model to meet housing needs of low-income border residents. Both regions share demographic and economic characteristics, and for both populations, transactions often are based on a cash economy. People acquire land and then build their homes one room at a time, similar to the piecemeal approach of Texas colonia residents. And like many mortgage lenders and bankers in Texas, Mexican banks have traditionally shied away from consumer and small-business loans to finance affordable housing.3
1 Republic of Mexico, "INFONAVIT National Employee's Housing Trust Fund" (htttp://www.infonavit.gob.mx/infingl.html). (Internet document.)
2 "What's at stake...; And home building," The Dallas Morning News (February 5, 1995), p. 1-H.
3 "Mexico Bracing for Invasion of Foreign Banks," Houston Chronicle (December 11, 1994), p. 1.