Jake Azzopardi urges banks to lean into affordable housing investment

Foundation for Affordable Housing CEO Jake Azzopardi said that banks and institutions should allocate a portion of their portfolios to affordable housing investment as part of a diversification strategy.

Mr Azzopardi spoke out after the International Monetary Fund (IMF) reported that while Malta has a healthy financial system, its banks are heavily exposed to real estate loans.

“The IMF outlook is unambiguous: Malta’s high exposure to real-estate lending represents a structural vulnerability for the banking sector. This is precisely why portfolio diversification is not optional but prudent financial management,” Mr Azzopardi said. 

He urged banks to allocate some of their funds to assets – with lower volatility and more predicable returns – aligned with established environmental, social and governance (ESG) standards.

“Within ESG, the ’S’ - the social component – remains underdeveloped in Malta’s financial ecosystem, despite its potential to deliver both stability and value,” he said.

“Affordable housing sits squarely at this intersection: lower risk profiles; stable long-term returns and measurable social impact. This is the space where financial logic and social responsibility align. It is the space where the banking sector should be leaning in more decisively.”

“At the Foundation for Affordable Housing, we firmly believe that financial value can sit well with social goals. It is the model we champion through collaboration."

The IMF found that lending to residential and commercial real estate and construction increased to 72 percent of the private loan portfolio by mid-2025, up from 61 percent a decade ago, and may grow further amid the ongoing tourism and construction boom. 

Residential mortgages account for 57 percent of private sector lending, up from 44 percent a decade ago.

Cover photo: Jake Azzopardi (LinkedIn)