President Javier Milei is trying to tackle Argentina’s longstanding lack of home mortgages in a bid to turn around a construction sector that’s losing jobs before his re-election bid next year.
It’s a big challenge in a country where most home buyers bring suitcases of cash to close a transaction. Mortgage-backed home sales surged early in Milei’s Presidency only to evaporate as the government stemmed a currency run last year in part by raising interest rates above 100 percent.
Economy Minister Luis Caputo talked with banks and brokers in recent weeks about creating a real-estate fund where six or seven financial players pool capital that the government could leverage with multilateral institutions in a public-private partnership. Some of the efforts are similar to real-estate investment trusts, or REITs, in the United States, with the aim of spreading out risk and reviving the housing market.
Mortgage credit currently finances only about 11 percent of home purchases in Buenos Aires City, down from a peak of 25 percent last year and far below the 40 percent reached about eight years ago under former president Mauricio Macri. Some of the mortgage loans in dollars that private banks and brokers would finance are starting with fixed rates in double-digits.
“Given the starting point – which is a country without credit – anything that appears will have demand,” said Federico González Rouco, an economist at Empiria Consultores in Buenos Aires, noting there were only 1,500 mortgage-backed sales in May in a nation of 46 million people. “We’re not talking about a market that’s soaring.”
Argentina’s private banks have long struggled to lend at scale because they lack long-term, low-cost funding. They also have few institutional investors willing to buy or absorb mortgage portfolios, leaving lenders with too much risk on their own balance sheets. The latest initiative is in its early stages as issuances are limited, liquidity is low and funding is concentrated in very short-term maturities.
The biggest lender now is state-owned Banco de la Nación, which is offering mortgages at artificially low rates around six percent, below traditional US mortgage rates currently at 6.5 percent.
“Mortgage credit in Argentina is still just beginning to crawl. It hasn’t really started walking yet,” said José Rozados, director of Reporte Inmobiliario, a local real estate consultancy. “The biggest bottleneck today is bank funding.” Most bank deposits in Argentina are concentrated in fixed-term deposits of less than 60 days.
It’s a key issue for Milei’s economic agenda heading into next year’s presidential election as unemployment is up and traditional industries are in decline. Argentina’s construction sector, a major employer, has lost 60,000 payroll jobs, or 14 percent of the total, since Milei took office as he slashed spending on public works. Construction employers intend to fire more than hire in the coming months too, government surveys show.
Turning around Argentina’s mortgage market would be a first step. In the first five months of the year, the number of mortgage-backed home sales was down more than 37 percent compared to the same stretch in 2025, according to the city’s notary association.
“Housing demand exists, but it needs accessible financing to turn into actual transactions,” said Magdalena Tato, president of the institution.
To fix that, bank executives and Caputo are considering options, including a fund run by Argentina’s social security agency ANSES known as the FGS, according to people with direct knowledge of the negotiations, who asked not to be named as talks continue. Another is the Labour Assistance Fund, created by a Milei reform this year and meant to ease severance payments.
The government wants part of the answer to come from market brokers, known locally as Alycs, and their closed-end funds.
“There is an opportunity to grow in capital markets, especially with dollar-denominated loans,” Caputo said at an event in Buenos Aires last week. “I’m telling banks and brokers to create a real estate fund, to get six or seven of them together, and I can triple or quadruple that with funding from multilateral organisations.”
Private banks have also proposed tools that were floated in the past but never implemented, such as interest-rate swaps. But the government’s preferred route is to use a public-private structure backed by multilaterals.
The kind of solution Caputo is pushing is already starting to appear, though on a much smaller scale. Argentine brokers such as Allaria, IEB and Bull Market are exploring, launching or offering real estate-linked products broadly similar to REITs.
Behind that incipient demand is a hunt for higher yields. Investors see that Argentine financial assets have already rallied sharply, while real estate has lagged behind. In recent years, many bonds and stocks have doubled in dollar terms. Property prices, by contrast, have climbed no more than about 10 percent in dollars.
For brokers, that gap is an opportunity – though most are still designing programs that require home buyers to pay for the majority of the home on their own, unlike more developed markets.
For example, Allaria’s Lendar fund raises money from individuals and uses it to finance dollar-denominated mortgage loans managed by real-estate broker Remax. The mortgage would provide up to 35 percent of the property’s value in dollars at an interest rate of 12.5 percent. For investors, it offers returns close to nine percent a year, above many corporate bonds.
IEB REIT Ciclo Nova takes a different path. It allows small savers to gain exposure to real estate without buying a property directly. The fund buys properties, rents them out and distributes income and potential appreciation to investors, who can enter with as little as US$1,000 instead of needing at least US$150,000 to buy a home in Buenos Aires.
“This is a segment that is just beginning in Argentina’s capital markets,” said Jose Luis Pavesa, chief commercial officer at Bull Market Brokers.“They are relatively small issuances and still fairly illiquid assets.”
by Ignacio Olivera Doll & Silvia Martinez, Bloomberg
