UK Mortgage : The mortgage market of UK is one of the most sophisticated mortgage markets in the world. The UK mortgage market offers a choice of around 4,000 products to customers. It is one of the most competitive where there is a growing need for lenders to devise winning strategies. However in such types of markets innovation is proved to be one of the determining factor in differentiating the winners and losers in the future. Market of UK mortgage is a top most innovative and competitive market in the world. The Mortgage market of UK differs in comparison to the other countries in the ground thatthere is no intervention in the market by the state or state funded entities. Due to the poorer economic conditions, the mortgage market in UK has contracted more in 2005 than predicted before. There was a general slowdown in the total secured lending mortgage market for the year 2004.The progression of the buy-to-let mortgage market in terms of market share from 2003 to 2004 was the lowest observed (0.6 percentage point compared to 1.3 percentage points in the previous period. Making a better customer relationships Lloyds TSB gained market share in 2004 and moved into second place in terms of gross advances. In contrast, Barclays was the only lender in the top ten to witness a decline in both its mortgage book and its new mortgage business in 2004.
Process Of Mortgage In UKIn the Mortgage market of UK, lenders usually charge a valuation fee, which pays for a chartered surveyor to visit the property and ensure it is worth enough to cover the mortgage amount.Such type of survey is not a full survey .That is why it may not identify all the defects that a house buyer needs to know about.Even it does not form a contract between the surveyor and the buyer.
Mortgage Lending In UK PresentlyAccording to the figures from the Major British Banking Groups net mortgage lending in November-2005 rose by an underlying £5.1bn; the strongest rise since July 2004. It is much higher than both October's rise of +£4.3bn and the average of +£4.4bn over the previous six months .A lower growth is being marked in overall unsecured personal lending. Both loans & overdrafts have risen by just £0.1bn, on the recent average (£0.4bn).
BBA director of statistics, David Dooks have said that,”November’s above-average rise in mortgage lending has truely reflected the recent upturn in approvals and provides more evidence that the mortgage market bottomed out in the summer and is now being underpinned by steady demand”.
Some Mortgage Types In UKIn case of Repayment mortgages each monthly payment pays off a little of the underlying debt, as well as interest on the loans. After the completion of the term the mortgage is then cleared. In Case of the Endowment Mortgages an endowment policy is provided to life insurance and save funds to repay the loan at the end of the term (Generally 20-25 years). If the investment performs badly, then a shortfall is faced on your loan at the end of the repayment period. Individual Savings Account (ISA) mortgages work on the same principle as endowments, but an Individual Savings Account is used as the loan repayment method. If your investment performs badly you could face a shortfall at the end of the mortgage term. Pension mortgages are similar to both ISA and endowment mortgages, but work on the basis that pensions provide tax-free cash on retirement. After the end of the mortgage term the loan is paid out of your tax-free lump sum.
Interest Rates On Mortgages In UKThe interest rates on any mortgages are not different only the range of options offered differ. Variable rates– Here you have to pay the continuing rates on your loan. The mortgage rate changes every time interest rates change. Whatever may be the kind of mortgage you start with, it is likely to change to variable rates at some point of time Fixed rates– Here the interest rate is fixed for the period agreed - often two to five years Capped rates - These are fixed, but if rate falls you have to pay the lower rate. Such deals can be a good for budgeting. Cash back deals - This is when lenders offer money back if you take out a particular product. Discounted rates – In such type of mortgages the borrower is offered a discount off the lender's variable rate. The rate paid will fluctuate in line with changes in the variable rate.
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UK Mortgage
Singapore Mortgage
The unique feature for mortgage particularly housing finance in Singapore is the role of the
mandatory saving scheme, Central Provident Fund (CPF). The home purchases in Singapore is mainly financed through the use of Central Provident Fund (CPF). This CPF was introduced in 1 July 1955 as the national funded pension scheme by the Colonial British Government. The relaxation of the CPF regulation has allowed residential property purchases in mid 1970s for public housing and early 1980s for private property. The total amount of withdrawals for housing has increased by about 14 fold in its peak in 1999 as compared to the year 1981. According to the Singapore Census 2000, the scheme has become very successful in promoting home ownership whereby 92% of the Singaporeans own a home.
Home Ownership In SingaporeSingapore’s home ownership is segmented into two types like private homeownership and public home ownership. Among them the public home ownership sector is the dominating sector accommodating 81.3 percent of total households from low income to upper middle income groups. The public housing system is strictly under the authority of the Housing Development Board (HDB), which covers duties such as housing production, housing management, housing finance and formulation of housing policies. The public home ownership sector is divided into three sub-sectors as follows
The public new housing sector.
The HDB resale market.
The HDB executive condominium market. In the new housing market, the dwellings are newly built and are sold at subsidized prices. The private owner-occupier housing market accommodates less than 10% of the total number of households. There is an indication of rising private housing stock, which increased from 14% in 1989 to 18.1% in 1999. The private sector receives comparatively less subsidies from the Government and thus is less regulated.
Financing System In SingaporeThere are mainly two types of financing systems in Singapore, which are as follows:
The HDB public finance sector
The commercial finance sector. HDB flats owners can enjoy the subsidized mortgage rates if they are eligible for the subsidized loans. The HDB can grant a subsidized loan to first time homebuyers and also to second time homebuyers who upgrade to another HDB flats. The private home owners and homeowners who do not qualify for the subsidized loan will, however, have to secure their financing from banks and financial institutions.
Asia Mortgage - Mortgage Market In Asia
Introduction To Mortgage Market In Asia
According to the World Development Indicators database 2005 - World Bank, Asia is the largest continent, which accommodates 61% of the world's population. Presently the countries like China, Indonesia, Malaysia, and Thailand are the developing regions and the fastest growing region according to the report of the World Bank. The significant progress over the Asian region has drawn the worldwide attention. Today 31% of the population in Asian countries resides in urban regions. This percentage is estimated to increase to more than 50% by 2030 (CIA World Fact book 2003-04). This truly depicts sharp focus on the issue of housing finance for low and middle-income families. The Asian Development Bank (ADB) also recognizes the issues surrounding housing finances. One of the key initiatives of ADB is to promote affordable housing for low and middle-income families. Mortgage Market Size In Asia Among the top mortgage markets in Asia, the size of China's mortgage market is considered as the largest in Asian region. The mortgage market is estimated at US$1670.7 billion (13,800 billion RMB) as of June 2004. Japan, being a developed country, has the second largest mortgage market among the selected Asian countries.But the size of the Chinese and Japanese mortgage markets are small in comparison with the US and UK mortgage markets. The mortgage market in China is relatively smaller compared to its population size and in comparison with the mortgage market in Hong Kong. Types, Terms and Conditions of Mortgages In Asia The most common types of mortgages in Asian countries are adjustable rate mortgages (ARMs) and fixed rate mortgages (FRMs). The typical origination requirements for mortgages show that the maximum loan to value ratio (LVR) ranges from 70% to 80%. Vietnam has a lower LVR of 50% while the LVR can be extended to 85% in India. The maximum mortgage term ranges from 20 years in India, Indonesia and South Korea to 30 years in China, Japan, Malaysia and Vietnam. The term can be extended to 32 years in Singapore. Banks impose a payment-to-income ratio in mortgage evaluation. The range is very wide, from as low as 33% for Indonesia to as high as 75% in Vietnam. The banking practice for Malaysia and Indonesia follows Islamic banking regulations. In Vietnam it is interesting that although the maximum LVR is only 50% (or at most 60% in some cases), the payment-to-income ratio is very high. The payment-to-income ratio for Singapore is relatively low 40%, but this does not include payment from compulsory pension-fund contributions. Mortgage Rates In AsiaThe interest rates for FRMs are usually higher than that for ARMs. The mortgage rate for Vietnam is the highest at 9.5% (India has the second highest rate of 8.5%) while Japan has a very low mortgage rate of 2.375%. The short-term rate in Vietnam is 4.80%. In contrast, the short-term rate for Japan is only 0.011%. The mortgage rate in Hong Kong is currently about 2.5%, which is lower than the prime-lending rate. Interestingly, the mortgage yield spread in Japan, South Korea and Singapore are higher compared to Hong Kong. Mortgage yield spread in Vietnam, India and Malaysia are relatively high at more than 3%. Countrywide Mortgage Market Performance
Mortgage Market In China The growth of the mortgage market in China can be better understood from its construction industry. By the end of 2003, the value of mortgage market in China has reached more than 1,2000 billion RMB (US$1,452.8 billion). In the end of June 2004, the total value of outstanding mortgages increased to 13,800 billion RMB (US$1,670.7 billion).
Mortgage Market In India Mortgage Financing industry, which is primarily known as the housing finance industry in India was estimated approximately at US $ 18 billion. A significant change in the structure of the mortgage industry is being marked in the recent years. Presently the banks are gaining market share in direct housing finance segment. From estimation it is found that the share of commercial banks in the direct housing finance segment has increased from 27% in FY 2000 to 57% in the FY 2003.
Mortgage Market In Japan Japan, being a developed country, has the second largest mortgage market among the selected Asian countries. Japan has a very low mortgage rate of 2.375%.
The mortgage market as percentage of Gross domestic product in Japan has reached at 40.3 %.
Mortgage Market In Hong Kong The mortgage market in Hong Kong is one of the most developed in Asia. According to the residential mortgage survey (which includes 23 authorized institutions) Nov-2005, the residential mortgage lending has slightly changed at HK$7.8 billion.
Mortgage Market In Vietnam Vietnam is a developing country and the mortgage market is very small as mortgage loans for homebuyers are not very common.
Mortgage Securitization In Asia Mortgage securitization in Asia has become the focus of attention after the Asian financial crisis. Excessive lending has been suggested as the contributing causes for the Asian financial crisis in 1997 by the International Monetary Fund (IMF) (Collyns and Senhadji 2000). The high exposure of commercial banks and finance companies to real estate related loans appears to be connected to the financial and currency market crises in these Asian countries in 1997. In Korea, the development of a secondary mortgage market has received the strong endorsement of the Korean government in the post crisis period. The Mortgage-Backed Securitization Company Act and the creation of the Korea Mortgage Corporation (KoMoCo) in 1999 have paved way for an active mortgage securitization market in Korea. The Japanese secondary mortgage market commenced in the same year as Korea facilitated largely by the introduction of the Law on the Securitization of Specified Assets by a Special Purpose Company (SPC) laws, enacted in 1998 and amended in 2000. Sanwa Bank originated the first Residential Mortgage Backed Securities (RMBS) of US$450 million in May 1999. Conclusion To Asian Mortgage Market Presently the mortgage markets in some of the Asian countries are growing very fast. From estimation it is seen that size of the mortgage market is still small compared to the other developed and developing nations over the Globe. The mortgage GDP ratio is very insignificant in the Asian nations.
Germany Mortgage
The financial services industry in Germany calls for a more closely integrated mortgage
credit markets in Europe. The German market for mortgage finance have reached a value of €31.2 billion (US$38.3 billion) in the year 2004. According to the statistics, the German market for mortgage finance has decreased by 10.1% since the year 2003. Presently a better stance is being marked in the mortgage market of German. So the market for mortgage finance is predicted to grow by 5.9% from 2004 to 2009 and will reach a value of €33 billion (US$40.7 billion). Mortgage Characteristics In Germany and Some Other Nations
Home Ownership Rate
Predominant Type Of New Mortgage
Amortization Period
Canada
66
Variable 40%Initial Fixed 60%
25
Finland
58
Variable 97%
15-20
Germany
42
Mostly Initial Fixed Or Fixed
28
Italy
80
Fixed 28%
10-15
Norway
77
Variable 90%
15-20
UK
70
Initial Fixed 28% Variable 72%
25
USA
69
Fixed 74%
30Mortgage Debt In Germany The ratio of residential mortgage debt to Gross national product (GNP) is somehow constant in Germany. The ratio of secured residential real estate debt to GNP fell slightly from 23 to 22 between 1983 to 1990. On the contrary the ratio of total residential to GNP fell slightly from 34 to 33 percent. The difference shows here the top of loans of Banks, advance funding of the Bauspar contracts and other types of unsecured loans for residential housing. Mortgage Banks In Germany The mortgage banks fund loans by issuing the mortgage bonds. The Government regulates the mortgage banks and the mortgage bond markets. The approved mortgage banks can only issue the mortgage bonds. Mortgage bank activity is restricted to lend residential and commercial property and to state and local Governments.In the end part of the 1990s communal loans accounted for 52 percent of outstanding loans, residential property loans accounted for 34 percent and commercial property lending accounted for 14 percent.
The mortgage banks also issue non-PFANDBRIEF mortgage bonds, which fund the mortgages that do not qualify for the PFANDBRIEF cover.For attracting the customers who perceives that the interest rates will fall further the mortgage banks offer one to two years fixed interest rate bridge loans with options to convert longer term, fixed interest rate loans. Mortgage Market Funding In GermanyDeposits: -Funds for housing come from deposits, contractual savings programs and the capital markets. Short-term deposits and current checking accounts continue to offer a stable, low cost source of funding for the banks. Whole Sale Funding: -Banks also fund the lending activities through issuance of the bank bonds. The mortgage banks provide direct capital market funding for the mortgages. Securitization: -Germany being one of the Europe's largest economy with approximately DM1.9 trillion of mortgages, thousands of banks, and some of the world's most powerful and sophisticated industrial and service corporations. It is one of the leading financial centres in Europe. A declining tendency was being marked in German's securitization market in terms of volumes in 2001: from a volume of Eur 7 billion in 2000 to approx Eur 5.5 billion in 2001. In the recent years a notional volume of some Eur 15.5 billion was hidden in synthetic deals in 2001. German bank KfW initiated two synthetic securitisation programs like Promise and Provide in 2001. Mortgage Bond Act In Germany The act came in to force in 19th July 2005. It aims at restructuring mortgage bond legislation. This law preserves and fosters the high quality of mortgage bonds. The power to issue mortgage bonds will be extended to all credit institutions, which comply with a certain minimum requirements to safeguard mortgage bond business. The Association of German Mortgage Banks (VDH Verband Deutscher Hypothekenbanken) The Association of German Mortgage Banks (VDH) comprises 18 private German mortgage banks. These specialized mortgage banks are major providers of loans to the public sector and capital for private residential and commercial properties. The total assets of some 1.3 trillion euros-equivalent to a 20% market share of Germany's banking industry-mortgage banks make up one of Germany's largest banking sectors.
UK Mortgage
UK Mortgage : The mortgage market of UK is one of the most sophisticated mortgage markets in the world.
The UK mortgage market offers a choice of around 4,000 products to customers. It is one of the most competitive where there is a growing need for lenders to devise winning strategies. However in such types of markets innovation is proved to be one of the determining factor in differentiating the winners and losers in the future. Market of UK mortgage is a top most innovative and competitive market in the world. The Mortgage market of UK differs in comparison to the other countries in the ground thatthere is no intervention in the market by the state or state funded entities. Due to the poorer economic conditions, the mortgage market in UK has contracted more in 2005 than predicted before. There was a general slowdown in the total secured lending mortgage market for the year 2004.The progression of the buy-to-let mortgage market in terms of market share from 2003 to 2004 was the lowest observed (0.6 percentage point compared to 1.3 percentage points in the previous period. Making a better customer relationships Lloyds TSB gained market share in 2004 and moved into second place in terms of gross advances. In contrast, Barclays was the only lender in the top ten to witness a decline in both its mortgage book and its new mortgage business in 2004.
Process Of Mortgage In UKIn the Mortgage market of UK, lenders usually charge a valuation fee, which pays for a chartered surveyor to visit the property and ensure it is worth enough to cover the mortgage amount.Such type of survey is not a full survey .That is why it may not identify all the defects that a house buyer needs to know about.Even it does not form a contract between the surveyor and the buyer.
Mortgage Lending In UK PresentlyAccording to the figures from the Major British Banking Groups net mortgage lending in November-2005 rose by an underlying £5.1bn; the strongest rise since July 2004. It is much higher than both October's rise of +£4.3bn and the average of +£4.4bn over the previous six months .A lower growth is being marked in overall unsecured personal lending. Both loans & overdrafts have risen by just £0.1bn, on the recent average (£0.4bn).
BBA director of statistics, David Dooks have said that,”November’s above-average rise in mortgage lending has truely reflected the recent upturn in approvals and provides more evidence that the mortgage market bottomed out in the summer and is now being underpinned by steady demand”.
Some Mortgage Types In UKIn case of Repayment mortgages each monthly payment pays off a little of the underlying debt, as well as interest on the loans. After the completion of the term the mortgage is then cleared. In Case of the Endowment Mortgages an endowment policy is provided to life insurance and save funds to repay the loan at the end of the term (Generally 20-25 years). If the investment performs badly, then a shortfall is faced on your loan at the end of the repayment period. Individual Savings Account (ISA) mortgages work on the same principle as endowments, but an Individual Savings Account is used as the loan repayment method. If your investment performs badly you could face a shortfall at the end of the mortgage term. Pension mortgages are similar to both ISA and endowment mortgages, but work on the basis that pensions provide tax-free cash on retirement. After the end of the mortgage term the loan is paid out of your tax-free lump sum.
Interest Rates On Mortgages In UKThe interest rates on any mortgages are not different only the range of options offered differ. Variable rates– Here you have to pay the continuing rates on your loan. The mortgage rate changes every time interest rates change. Whatever may be the kind of mortgage you start with, it is likely to change to variable rates at some point of time Fixed rates– Here the interest rate is fixed for the period agreed - often two to five years Capped rates - These are fixed, but if rate falls you have to pay the lower rate. Such deals can be a good for budgeting. Cash back deals - This is when lenders offer money back if you take out a particular product. Discounted rates – In such type of mortgages the borrower is offered a discount off the lender's variable rate. The rate paid will fluctuate in line with changes in the variable rate.
European Mortgage
According to the European Mortgage Federation’s statistical publication on
European Mortgage markets, Hypostat 2003 has revealed a strong growth in Europe’s mortgage markets. Though the GDP growth in European union area was of just 0.4% in the 2003 still the mortgage markets grew by 7.4%. At end 2003 the total value of residential mortgage debt outstanding in the EU15 was €4.24 trillion, equivalent to €11,200 worth of housing debt per capita.
Recent Stance Of European Mortgage Market
The following points highlight the recent trends of European Mortgage market.
The average rate of home ownership in the EU15 member countries is 64%.The lowest rate is in Germany (41%) and the highest rates in Spain and Greece(83%).
The average rate of growth of the residential mortgage market over the last 5 Years is 9% and 8% over the last 10 years.
The total value of residential and non-residential mortgage loans at the end of 2003 was approximately €5.1 trillion.
Germany and UK, the front line Players in European Mortgage Market
The top players in the mortgage market of Europe represent over half of all Europe’s outstanding mortgage debt had to face slower rates of growth at 1.2% and 4.4% respectively, compared to an EU average rate of growth of over 7%. Poorer macro-economic position in Germany has marked repercussions on its Housing and mortgage markets.The UK market has slowed down following a number of years of very rapid growth.
Over all picture of European Mortgage Market
Countries like German and UK with other European markets have faced a slower rate of growth in comparison to the southern countries where the housing debt is very less.
The Mortgage market in the countries like Latvia, Poland, Czech Republic and Hungary have experienced a phenomenal growth averaging in excess of 50% per annuam. Some old EU members have also faced strong growth due to rising home prices.
Countries like Greece, Spain, Italy, and Ireland have faced a mortgage market growth of
Around 25% during 2003.
Rising House Prices In European Market
There is an overall increase in the housing prices in EU areas in recent years by supporting to the consumption activity in the country. The strongest prices increase was felt in the countries likeLatvia, Portugal, Spain and the UK. However the higher house prices have fueled the demand of more mortgages.
The European Mortgage Federation
It is a European trade association, which plays a significant role in the credit sector.
It groups together financial institutions consisting of granting mortgage loans in the Member States of the European Union and Norway. This Federation was founded in 1967 and based in Brussels. The Federation has brought together private and public mortgage lenders, including universal/commercial banks, mortgage banks, savings banks, mutual &
co-operative banks, building societies, umbrella companies and insurance companies. Together they grant around 75% of residential and commercial mortgage loans in Europe.
The below graphs give a true picture of the Mortgage market of EU nations.Overview of European Residential Mortgage Markets, 2003
Country Mortgage
Booming housing sector over the world has given birth to the elastic demand in the mortgage. Find detailed on the mortgage practices, mortgage rates, mortgage types used among various countries over the world.
Australia Mortgage In Australia Mortgage market, Mortgage Industry Association of Australia (MIAA) has been playing a significant role by rendering manifold services. MIAA has more than 10,000 members. Find detailed on Australia Mortgage along with Australia Mortgage Rates.Canada Mortgage In Canada Mortgage, banks play a very significant role by availing various mortgage products. Fixed Rate Mortgage, Variable Rate Mortgage and Capped Rate Mortgage are generally used in the country.Hong Kong Mortgage Hong Kong Mortgage is well developed and well organized in the Asian region. The Hong Kong Mortgage Corporation has been adopting new initiatives for the development of the mortgage market in the country.
