Colombian Mortgage MarketPricing Structure

UPAC collapsed:•M.IR reached 60%.•Economic recession.•Capitalization of interests was declared unconstitutional.

Early 70’s

•Creation of UPAC (Unit ofConstant Purchasing Power).

70’s – early 90’s

UPAC was modified several times:•Linked to M.IR.•Capitalization of interests.

Mid 90’s – Late 90’s

Creation of UVR.•Linked to inflation.Conversion of CAVs into Banks.

Dec 99 2000

•Loan balances recalculated with UVR.

2002

•UVR

Colombian Mortgage MarketMortgage trends

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Creation of the CHMCWB Strategy and IFC Role

Early Stages 1993-1998

•Support in the drafting of the new mortgage and capital market Law.

Intermediate Stages 1999- mid 2001

•Assistance in the implementation of the new Law.•Addressing the Constitutional Court ruling.•Break barriers between institutional investors.

•Creation of an Ad-hoc Repo mechanism with CB•Creation of a Clearing Mechanism

Creation of the CHMCWB Strategy and IFC Role

Final Stages Late 2001-2002

•Creation of the CHMC in July 2001•IFC’s equity investment of US$40 million and LCGF of US$100 million.•Attract new investors (AVVillas, Colpatria, CAF). •Assistance in risk management, technological development and organizational structure.

Creation of the CHMCWB Strategy and IFC Role

Recent Achievements 2002

•First mortgage issue in April 2002•COP 464 billion (US$ 200 billion)•Demand 8.9 times.