The Globalization and Europeanization of Mortgage Markets

Abstract

Do globalization and Europeanization lead to the deterritorialization of European mortgage markets? Neither economic globalization nor EU policies have resulted in one European mortgage market. The various European mortgage markets are still quite different from one another in many respects. In most countries national lenders continue to dominate the market even though regulation itself has been internationalized to some extent. Deterritorialization has been slow for various reasons: tax, law, cultural and structural differences play a part, but the limited market share of mortgage intermediaries and the unequal treatment of foreign mortgage lenders in some countries also form a barrier. Path-dependent trajectories are highly important, but can sometimes be bypassed by global processes or downplayed by the entry of foreign firms. The secondary mortgage market is increasingly becoming globalized, while most primary mortgage markets remain largely national. The financial crisis may temporarily slow down securitization, while simultaneously both decreasing and increasing the globalization of mortgage regulation, firms and markets. Copyright (c) 2009 The Author. Journal Compilation (c) 2009 Joint Editors and Blackwell Publishing Ltd.

Household vulnerability in rural areas: Results of an index applied during a housing crash, economic crisis and under austerity conditions

“…David Harvey (2011) identifies two key factors to explain the current economic crisis: (1) the deregulation and empowerment of the most fluid and highly mobile form of capital -money capital -"to reallocate resources globally, finding new ways to absorb risks through the creation of fictitious capital markets" (p. 5); and (2) bubbles in the asset market (such as housing and property markets) compensating for the lack of other investment opportunities, fuelled by finance capital and facilitated by extensive financial innovations. In the wake of the financial crisis, a growing body of literature has examined financialisation relating to mortgage markets and home ownership, referring to a pattern of accumulation in which profit making occurs increasingly through financial channels rather than through trade and commodity production (Aalbers, 2009a). Research in this area, for example, has focused on the linking of mortgage markets and stock markets through so-called securitisation investment vehicles (Gotham, 2009;Wainwright, 2009) originating in the US sub prime market, and globalisation of mortgage markets as a result of the financialisation of borrowers and markets and a globalisation of mortgage lenders (Aalbers, 2009b;van Heijden et al, 2011).…”

“…Research in this area, for example, has focused on the linking of mortgage markets and stock markets through so-called securitisation investment vehicles (Gotham, 2009;Wainwright, 2009) originating in the US sub prime market, and globalisation of mortgage markets as a result of the financialisation of borrowers and markets and a globalisation of mortgage lenders (Aalbers, 2009b;van Heijden et al, 2011). For Aalbers (2009a) this transformation of the mortgage market has had profound effects on housing markets and the creation of housing bubbles, enabling the expansion of the mortgage market and allowing borrowers to buy more expensive homes fuelling a housing bubble. Furthermore, a surge in credit (often through transboundary flows of capital) has also fuelled speculative construction booms as banks facilitated often high-risk loans to developers.…”

Externalidades territoriales de la gobernanza financiera global

“…Esta interrogante refería inequívocamente al contagio y difusión (Aalbers, 2009), pero a la vez innegablemente a una geografía de la crisis. Se trataría, según Harvey (2011), del tránsito de crisis localizadas a crisis globales.…”

The geography of money and finance

“…The rising demand for home ownership, not just as social necessity but increasingly as a household investment vehicle (especially as a pension asset), and the steady and seemingly ineluctable increase in house prices, all fuelled the expansion of the mortgage market, and traditional mortgage institutions (Sassen, 2009). What historically had been a 'locally originating, locally distributed' model of mortgage lending had become a 'locally originating, globally distributed' model (Wainwright, 2009;Martin, 2011), linking housing and the geographies of urban development into the flows and forces of the global financial system more widely (Aalbers, 2009). Those geographies, furthermore were uneven: in the United States, for example, the housing and subprime mortgage boom was not a universal phenomenon, but one concentrated in particular cities and states, such as Nevada and Florida, often associated with large-scale speculative housing developments.…”

“…In essence, and connecting to broader work on the subprime crisis (e.g. Aalbers, 2009), this spatialized understanding requires an interrogation of the links between the local and the global and a recognition of the variegation of crisis and its contingent, developing spatial outcomes.…”