2000s
Summary
Recovery
Asian economies recover from the financial crisis, and some experience housing booms. Commercial banks become the dominant lender, and mortgage instruments are increasingly sophisticated.
Global Context
Government As Partner
The population of the world becomes half urban, with more people living in cities than there were on the planet in the 1950s and more than 1 billion people living in urban slums. While the private sector is the development leader, government becomes a more sophisticated partner in the planning and allocation of resources to meet the needs of growing urban populations.
Influences
- Housing sector flourishes in China, Hong Kong and Korea
- Mortgages account for a quarter of all bank loans
- China experiences massive rural-urban migration, spiraling housing prices and shortages of housing migrants
- Rapid urbanization means that most Asians will live in cities by 2030
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Policies and Programs
- China encourages development of affordable housing and combats speculation
- China undertakes banking and financial reforms and introduces mortgage insurance programs
- Asian countries apply policies to restructure the financial sector for economic recovery
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Institutional Roles
- In Indonesia, private sector lenders complement two state-owned mortgage banks in primary mortgage market
- In Thailand, commercial banks and the Government Housing Bank are the two dominant mortgage lenders
- Regional commercial banks bear liquidity risks
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Methods, Tools, and Practices
- Adjustable rate mortgages become more popular
- Maximum loan-to-value ratios average 70% to 80%
- Mortage terms become more flexible
- Securitization and secondary mortgage markets flourish
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