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Private Banking home alert of a possible housing bubble in Ecuador


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EFE Social Security Institute (Biesse) is offering mortgages without any input, which makes builders drive up home prices "because the person does not feel, it has no entrance fee," he said.


The Biesse, which began operations last year, this year intends to provide $ 800 million to buy houses with money contributed by the Ecuadorian Social Security, which is between 50% and 60% of total property loans provided for the current year, Morillo said.


"credit is almost flooding (the market) and supply (housing) has not had time to react", causing a price increase, he said.


The Biesse and other public banks have a delinquency rate of 8.5%, which is "impossible", according to Morillo, which means "operating losses."


At the same time, have "a lot less provisions" that private banks to fill that hole, which eventually will have to take the state, said Morillo.

"As the volume of losses is large, it can threaten macroeconomic stability," he said.

Morillo said that such stability is not endangered at present and that public banks is still time to adopt a credit policy "more prudent", and that paying 100% of the value Housing is not a "normal" condition.


"We are in the initial stages" of a process that can lead to excessive prices if no action is taken, Morillo insisted.


Credit abundant and very favorable for borrowers was very motor of the housing bubble in the United States, which triggered a global crisis, experts say.


Morillo said that the default rate of private banks in Ecuador is 2.5%, more than three times lower than public institutions.


also indicated that private banking has more 1,700 million dollars in supplies, which is the capital reserved to take losses, a figure that exceeds 500 million minimum required by regulatory agencies in Ecuador.