The bill that contemplates a mortgage dividend subsidy was promoted several months ago by the Chilean Chamber of Construction (CChC) and the Association of Banks and Financial Institutions (ABIF), together with the Ministries of Housing and Finance. Currently, it was approved in general by the Senate Chamber, and must be discussed and voted on in particular by the Finance Committee of the Senate, after having been approved in general by the Chamber of Deputies.

What is the objective of this initiative?

The bill that creates the dividend subsidy seeks to reduce the interest rates of mortgage loans, thus reducing the value of dividends and encouraging the purchase of new homes. In this way, it not only seeks to facilitate access to housing, but also to reduce the high level of stock that currently exists in the country, and to promote investment in the real estate and construction sectors.

What does it consist of?

The initiative contemplates the delivery of 50,000 subsidies to individuals, applying a discount of up to 60 basis points to the interest rate of mortgage loans, provided that the following conditions are met:

1. It is the first sale of the property.
2. The value of the home does not exceed UF 4,000.
3. That the applicant complies with the requirements established in the New Housing Support Guarantee Program, in accordance with the sixth transitory article of Law No. 21,543, which creates the Special Guarantee Fund (FOGAES).

Of the total number of subsidies, 6,000 will be earmarked for housing units of up to UF 3,000 that meet the requirements of the DS15, in line with the Ministry of Housing's Emergency Housing Plan, which is 70.98% complete as of the end of February 2025.

In addition, a complementary program will be implemented under the umbrella of FOGAES, which will offer a guarantee of up to 60% of the value of the home. This mechanism seeks to allow an even greater reduction in the interest rate - of the order of 40 additional basis points - which, combined with the base subsidy, could represent a total benefit of up to 100 basis points.

It should be noted that this subsidy will not be applied to sales made before December 31, 2024, nor to renewed mortgage loans, since its purpose is to promote new sales transactions.

To illustrate the effect of the measure, considering a UF 4,000 home with 90% financing for 30 years, and an average rate of 4.41% (according to Central Bank data as of the end of March 2025), a 100 basis point reduction would reduce the rate to 3.41%. This would imply that the monthly dividend would drop from approximately $695,636 to $618,405, which represents a savings of approximately $77,231 per month.

In summary, this initiative seems to be going in the right direction, providing concrete support for access to home ownership, particularly for the middle-income sectors. In addition, it should be noted that it has a significant scope, considering that of the approximately 105,000 homes available nationwide (stock according to CChC data), it is estimated that approximately 70,000 units have a value of less than UF 4,000, so they could qualify for this state subsidy.

Sebastian Mahave
Senior Real Estate Analyst Fynsa AGF