Housing finance in developed countries - An international comparison of efficiency

An examination is made of the efficiency with which different mortgage markets deliver mortgage credit to home buyers, as part of a major project sponsored by Fannie Mae that compared housing finance arrangements in the US, Denmark, France, Germany, and the UK. In these countries, mortgage loan funding ranges from heavy dependence on retail depository institutions (UK and France) to extensive capital markets funding (Denmark). The adjusted spread between the costs of mortgage finance and government debt, gross of subsidies, and net of the market value of options for the 5 countries are estimated and compared. The results show that despite significant diversity in the details of the systems, the estimated adjusted spreads for intermediating funds to owner-occupied housing do not vary greatly across the dominant loan types in these countries. These results are consistent with the proposition that the basic operating costs of intermediating funds into mortgages are similar across the countries, which share many aspects of financial technology.