Housing affordability tightens in major cities, while mortgage quality remains strong
Antonio Tena, Rodrigo Conde
In this episode of Moody’s Talks, Rodrigo Conde, AVP- Analyst, Structured Finance, and Antonio Tena, VP – Senior Analyst, discuss the consequences of house price increases in major European cities especially in relation to the tightening of affordability, the mortgage market and the effect in public budgets.
Structured finance — EMEA: Housing affordability has decreased in major cities, mortgage quality remains high
Over recent years, house price inflation has been outpacing income growth in certain major European cities, lowering purchasing power, leaving mortgage credit quality undiminished, while benefiting municipal budgets. Mortgage borrowers in major cities have relatively stronger credit profiles, supporting the performance of residential mortgage-backed securities (RMBS). Cities are major economic hubs that attract workers and others, lowering the risk of significant house price depreciation. In the public sector, municipal budgets benefit from house price inflation with high property tax collection rates.