Europe Home Mortgage Finance Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Europe Home Mortgage Finance Market - Growth, Trends, Covid-19 Impact, and Forecasts (2023 - 2028)

Europe's home mortgage finance industry witnessed a significant decline owing to the outbreak of the COVID-19 pandemic. This was due to the lockdowns imposed by the government that led to the shutdown of various businesses, which in turn led to a huge job loss and unemployment in Europe. Being quarantined at home, people could not complete their day-to-day needs, and their income was stopped. Tenants had to move to their hometowns because having no jobs and paying rent was getting more difficult each day for them, making it difficult for the property owners to repay their loans. Additionally, because of unemployment, people needed more time to be ready to opt for home loans, home mortgages, or any other related service, which resulted in a decline in the demand for this market.

Of the various forms of investment, residential or real estate investment is still a very popular investment option not only in Europe but all across the globe. Housing loans account for approximately 77% of total adjusted loans. The growth rate of lending to households gradually increased over the years to reach a high of 4.2% last year. Meanwhile, the Euro area bank interest rate on loans for house purchases moved steadily downwards from 3.9% in August 2011 to 1.3% in August 2021. An increase in the affordability of houses and the adoption of housing finance services among individuals and businesses for various purposes, such as purchasing new lands, buying new houses, and various residential construction projects, is expected to drive the growth of this market during the forecast period.

The increasing number of business-class or salaried individuals are now opting for housing mortgage loans owing to the realization that residential rental payments are equivalent to the EMIs is primarily driving the housing mortgage market in Europe. Furthermore, various schemes formed by developers or builders, and the government, such as late EMI payments and construction-linked plans, lead to market growth.

The high demand for housing reflected the low-interest rate environment combined with changing preferences of consumers due to the COVID--19 pandemic. The European banks' strong capital and liquidity positions have enabled them to fulfill, to a great extent, the demand for housing, expanding their exposures toward mortgage loans. The supply of housing was unable to keep up with the demand due to a lack of housing investments in previous years, construction constraints, and supply-chain disruptions caused by the pandemic. This, in turn, resulted in a much high growth rate in house prices.

Europe's home mortgage finance market is fragmented in nature. It has a large number of considerable regional and local players in the market. Some of the major players in this market are Rocket Mortgage, United Shore Financial, Aareal Bank, Bank of America, and Barclays Corporate Banking.

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