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Country Profile for …
Housing Finance Market Overview
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providers of housing finance, possibly their market share or naming of biggest player
in the market
ratio of mortgage debt to GDP (best are two mentions: year 2000 and now)
Example:
In Germany, housing finance is mainly raised from banks and Bausparkassen, with the savings bank group
(including their Bausparkassen branch) taking the largest share. In the year 2008, the value of outstanding
residential mortgages equalled more than 1.1 trillion Euro. In real terms, the housing finance market has
remained stable in Germany which is as well reflected in the somehow constant ratio of residential mortgage
debt to GDP. This ratio fell from 53.2 per cent in 2000 to 47.7 per cent in 2007.
The Market from the Perspective of the Demand Side
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usual maximal loan-to-value ratio
share of fixed vs. variable interest loans
share of foreign exchange loans (if of importance)
government subsidies/support
Example:
In Germany, the usual maximal loan-to-value ratio amounts to 80 per cent. Yet, the most banks offer to their
customers mortgages with a higher loan-to-value ratio (LTV) of more than 60 per cent only to the price of a
considerable interest increase. This is due to the fact that mortgages with a LTV not over 60 per cent can be
refinanced to better conditions by the bank. Bausparkassen hypothecate up to a LTV of 80 per cent and their
loans are usually placed as second lien mortgages to provide favourable conditions for further mortgages needed.
Hence, housing finance in Germany ideal-typical consists of 50-60 per cent mortgage loans provided by banks,
20-30 per cent Bausparkassen loans and 20-30 per cent own equity. 60 per cent of the loans are fixed-interest
loans. Customers receive on Bauspar deposits a government premium of maximal 45.06 Euro (married
customers 90.11 Euro) per annum.
House Price Development
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Average annual house price growth (best for a period from 2000 to now)
Example:
Housing prices have remained quite stable over the past few years – the average annual house price growth from
2000 to 2007 was -0.4 per cent. Also therefore, house prices have been not affected so far by the financial crisis
though prices for second hand houses and apartments show a negative tendency.
Special Characteristics of the Market
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Mentioning of special characteristics of the housing finance system (if existent)
Example:
Germany has a contractual savings system, the Bauspar system which is characterized by low interest rates on
loans and a government interest premium paid on savings. It is offered by specialised institutions, the
Bausparkassen. The government grants an interest premium equal to 8.8 per cent of the amount saved (up to a set
maximum).
Refinancing Instruments
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Refinancing instruments: share of deposits, Covered Bonds, mortgage backed
securities or other instruments; possibly tendencies and special characteristics.
Example:
Deposits are for the banks one main source and for the Bausparkassen the only source of funding for their
mortgage market activities. Short-term deposits and current checking accounts continue to offer a stable, low
cost source of funding for the banks and Bausparkassen. Banks also fund the lending activities through issuance
of bank bonds or the issuance of Pfandbriefe (Covered Bonds). Outstanding Covered Bonds equalled to 17.9 per
cent of all outstanding residential lending in 2007. Funding mortgage loans through Pfandbriefe is legally
constrained by a LTV limit of 60 per cent. The securitisation of mortgages plays only a minimal though possibly
growing role in Germany.
Articles
Please include here links to articles relating to housing finance of country under review
Associations
Please include here links to associations relating to housing finance of country under review
Banks & other mortgage institutions
Please include here links to mortgage provider of country under review
House price indices
Please include here links to house price indices of country under review
Interest rates on mortgages
Please include here links to websites with current and/or old mortgage rates
Sources used for the creation of the country profile
Please include here the sources (possibly with links) you used to write this country profile
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