Housing Standards 2004/2005
Financing Housing and Refurbishing Housing Estates

2. Market-Based Financing of Owner-Occupied Housing in Advanced Countries

In this chapter of the analytical section the authors focus on describing and comparing the systems that have been set up for financing owner-occupied housing in selected advanced countries - namely, Germany, France, the United Kingdom, and the United States. A brief introductory summary in which the basic concepts in the field of the market-based tools of home financing (such as, for example, securitisation, the loan-to-value ratio (LTV) indicator, etc.) and comparing between countries how developed the markets in mortgage loans are using basic indicators (e.g. the share of outstanding home loans to GDP, the extent and types of state intervention, typical and the maximum values of the LTV, etc.). This is followed by a more detailed description of the systems of home financing and how they evolved in the four countries mentioned above, and in this connection an evaluation is presented of the efficiency of these systems of financing owner-occupied housing. This evaluation also contains descriptions of the methodology used in the comparative study by Diamond and Lea (1992) and the methodology of the United Nations Economic Commission for Europe (UN/ECE), along with the findings that the authors of these studies made. The chapter concludes with a description of expected trends in the development of home financing systems in the advanced countries in relation to the process of European unification, the continuing liberalisation of financial markets, and the rapidly growing demand on the part of households for home financing loans in recent years.

Given the relatively easy accessibility of the resources this part of the study was based on (see the list below), this chapter will not be discussed in detail at this point.