Impact of the mortgage crisis in Europe !

Implications: A comparison to the mortgage crisis in the US for European markets and possible impact here are woth to explore. 

Analysis: With no doubt the mortgage crisis arrived to Europe, pretty at the same time or as fast as in the States, but with different impact, duration and consequences. The mortgage market will slow down till markets will stabilize again (second half of year !). In most countries over Europe, loans are given to clients by mortgage banks at fix rates and for quite a long duration or maturity (at least 5 years, most 10 years and even more) and reasonable input of equity is every time demanded (20 to 40% depending of client, bank or location). For future owner-occupiers who wish to invest next in residential property it is even possible to get a special property saving account by their home bank for this specific purpose and today we can even see an increase in such account openings (at least in France and Germany two big markets in Europe). So I think the very current negative trend and expected slow down by new investment and financing will remain at a certain non tragic level and last for the next 6 or 12 months maximum. The banks will have to make business again to survive and things will be better as soon as market views are positive again, surely even before 2009. Deals will certainly be delayed or renegotiated but not canceled and we don't really expect RE depreciation. The real problem here is more or less the lost of trust by transaction within the bank community and that will have to be restored ASAP.

Jacky Starck
RE Council Member for European markets
Berlin 19th March, 2008