European Mortgage Market: An Overview 1992-2003

Abstract

The development of the European mortgage market, its current situation in terms of volume, growth, prices, interest rates and new products, and an analysis of mortgage integration are the focus of this paper. The recent creation of the European Mortgage Finance Agency (EMFA), as an attempt to build a single European securitization market, is an important step toward integration within the wider goal of EU financial integration. Obstacles to integration, potential members of the EMFA, and its main goals and advantages are discussed in the forward-looking section of this paper. In addition, the paper deals with three important aspects of the EU mortgage market, taken as a whole:-How it operates. Other aspects considered include transaction costs, transparency requirements affecting credit institutions (European Code of Conduct), and a classification of mortgage products on the market.-Refinancing in Europe (as compared to the USA). The secondary market for the funding of financial institutions, in relation to mortgage bonds and mortgage-backed securities, including explanations of their main characteristics and the differences between them.-How European mortgage markets influence the economy and how they may affect private investment and consumption, household debt (which continues to increase each year), and the performance of financial institutions (high competitiveness).

On security of collateral in Danish mortgage finance: a formula of property rights, incentives and market mechanisms

“…The Danish mortgage banks have proven competitive in an open international market as evidenced by their high market share of about 90 % of long term real credit in Denmark in contrast to many other European mortgage markets dominated by general banks (Suarez and Vassallo 2004). In 2011 total lending by mortgage credit institute amounted to 134 % of GDP (Jensen 2012), of which residential mortgage debt represented 100.9 % of GDP, one of the highest ratios in EU only exceeded by the Netherlands (EMF Hypostat 2011).…”

“…Through the balance principle a number of risks are eliminated, in combination with strong property rights. The qualities of the securitization model are highlighted in a number of comparative studies (Wyman 2003;Suarez and Vassallo 2004;Nadler 2005). A study by the International Monetary Fund stated that the Danish mortgage system is widely recognized as one of the most sophisticated housing finance systems in the world (IMF 2006).…”