In housing microfinance (HMF) circles it was envisaged that the unmet demand for housing would be met by a merging of the finance gap. Banks and mortgage lenders would go down market by making smaller loans to a lower income clientele. Microfinance institutions (MFIs) would expand the size of loans and target clientele for their housing credits somewhat upwards. Over the last decade, however, HMF appears to have grown mostly through microfinance institutions creating a home improvement product and, to a lesser extent, making modestly larger loans for new home construction and purchase. However, the supply of HMF by MFIs will most likely satisfy only a minuscule fraction of market demand in most countries even if it continues to increase at current rates for decades (see Ferguson’s paper on housing microfinance in this issue of Global Urban Development Magazine ).

As the MFI industry has found technical assistance an unnecessary expense for microenterprise lending, MFIs have also tended to offer only microcredit for affordable housing without other products and services essential to expand this market. HMF requires a much broader institutional relevance to demand in emerging countries. platform than MFIs offer in order to expand dramatically to a scale Regulated financial institutions such as commercial banks, in particular, but also housing cooperatives, and credit unions can help provide the broader organizational base necessary for expanding HMF loan volumes to massive size (see Magowan’s paper on capital market funding of housing microfinance in this issue of Global Urban Development Magazine ). Banks have a number of comparative advantages including extensive branch office networks, back in serving the poor and reaching economies of scale. This office support and I.T. platforms for internal controls, as well as access to their own financial resources from deposits.