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Global mortgage industry : selected developed markets - statistics & facts

The outbreak of the coronavirus (COVID-19) pandemic caused a shock in the mortgage market worldwide. In many countries, new lending volumes fell to record low levels in the second quarter of 2020 as a result of declining consumer sentiment and nationwide lockdowns. Nevertheless, new mortgage lending in the second half of 2020 and 2021 has been on an upwards trend. In Germany, mortgage originations surpassed the pre-pandemic levels in the third quarter of 2020, briefly making it Europe’s leader in new mortgage originations before the United Kingdom reclaiming first place. Mortgage lending has also started growing in Australia. In the United States, mortgage originations in the third quarter of 2020 reached volumes as high as prior to the financial crisis (2007-2010).

How do you measure the size of the mortgage market?

Mortgages are the most common way to finance real estate. Because they are backed by a real asset, mortgages are one of the investment instruments with the lowest risk. As such, they play an integral role in monetary policy and the functioning and stability of the financial system. Countries with more advanced financial sectors and lending practices are likely to have a bigger mortgage market. For many countries, the ratio of household debt (mortgages and consumer credit) to GDP exceeds 100 percent, reaching values as high as 258 percent in Hong Kong, and 216 percent in the United States. The mortgage market is generally divided into two segments. The primary mortgage market refers to lending to the household and commercial sector, whereas in the secondary market, lenders bundle together mortgages into mortgage-backed securities (MBS) and sell them to pension funds, insurance companies, and other types of investors. In the United States, the primary mortgage market was worth roughly 17.6 trillion U.S. dollars in mortgages outstanding, whereas the secondary market, or the value of mortgage-backed securities outstanding, was valued at 11.9 trillion U.S. dollars in 2021.

What is the impact of the coronavirus (COVID-19) crisis on the mortgage market?

One reason for the uptick in new lending is that the mortgage market has been an integral element in central banks and governments’ efforts to tackle the economic crisis. With mortgage interest rates at historic lows, demand for residential property has been booming. While this might be good news for the economy overall, it does not necessarily guarantee aspiring homeowners a better deal. Limited supply combined with high demand has caused house prices to grow faster than income, causing concerns about affordability. Vaccination might be underway, but the pandemic is not nearly over, and concerns about the raising inflation mean that central banks are likely to start slowly increasing interest rates.

Interesting statistics

In the following 7 chapters, you will quickly find the 32 most important statistics relating to "Mortgage industry worldwide: developed markets".

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