The globalisation of the mortgage market

Stuart Lowe

in The Housing Debate

Published by Policy Press

Published in print September 2011 | ISBN: 9781847422736
Published online May 2012 | e-ISBN: 9781447305514 | DOI:
The globalisation of the mortgage market

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A revolution in global finance following bank liberalisation in the 1980s and the invention of new methods of bundling debts into bonds — through the process of securitization — enabled banks to separate the origination of mortgages from the long-term investment of these debts. In this new global financial system, a tsunami of capital was created that washed across the planet, creating a surge in house prices almost everywhere, especially in the house price bubble of 2000–5. There were, however, many variations in the institutional structure of mortgage systems, so the economic and social outcomes of peoples' access to new forms of lending at a national level were very varied. Societies with open/liberal markets benefited most as innumerable new mortgage products connected households to these global flows of capital. But even some of the social market economies were impacted by this new era of global finance, and integrated rental markets came under pressure. The process of housing equity withdrawal enabled homeowners to access accruing property values in ways previously impossible.

Keywords: globalisation; securitisation; corporatism; secondary mortgage markets; house price bubbles

Chapter.  9953 words.  Illustrated.

Subjects: Urban and Rural Studies

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