From Screening Out to Upgrading Creditworthiness Rethinking Housing Finance for Informal Earners in Emerging Economies

Formal housing finance systems in emerging economies rely on fixed incomes and rigid credit scoring, systematically excluding 50–80% of urban households, particularly informal earners. This exclusion created housing finance gap forcing over 1.1 billion people into informal settlements despite available housing supply and untapped private capital. The crisis is not a lack of finance, but a system that is unable to manage risk beyond formal employment structures The session introduces a shift from exclusion-based credit screening to proactive creditworthiness upgrading model for informal earners. It draws on tested policy approaches from Egypt, India and Brazil. At system level, it examines Risk-Sharing Housing Finance Models where central bank–supported guarantees and regulatory incentives successfully crowded private lenders into serving informal households. At asset level, it integrates Quality-Linked Housing Finance, where sustainable, high-quality housing functions as a core risk mitigant: by increasing asset’s collateral value, loans are de-risked for commercial banks. This creates virtuous cycle in which improved housing quality strengthens repayment capacity and asset stability, offering a replicable and financially sustainable roadmap to bridge the finance gap. This Demonstrates that ignoring this ready-to-invest population is the sector's greatest opportunity cost The 90-minute Policy Decision Lab begins with 15-minute system framing, followed by 60-minute moderated dialogue on three policy choices: Who bears initial inclusion risk? Can housing quality mitigate risk? How far can inclusive finance expand without undermining stability? Each choice undergoes a 'reality-check' segment, with informal sector validators providing concrete data on income volatility, savings capacity, and collateral constraints. It concludes with a 15-minute live anonymous voting to set policy priorities and agreed directions The session will include policymakers, representatives from financial practitioners, urban experts, NGOs, and validators from informal sector. It will deliver the WUF13 Policy Roadmap on Inclusive Housing Credit, outlining actionable instruments for upgrading creditworthiness, aligning housing quality with risk management, and responsibly expanding mortgage markets. Policy makers and housing finance institutions will benefit from evidence-based replicable framework that directly advances New Deal for Housing Finance and supports resilient urban growth