G’Day Everyone,
Thanks all for providing a great informational forum platform and great participants.I have been brainstorming on a case study recently about “Introduction Mortgage System into a Developing Countryâ€.
Please provide your valued thoughts.
Case Study:
Time: Current
Mortgage system is well established in Australia and many other countries around the world. This system has been used successfully for hundreds of years and helped many people to buy their first home or invest further in real estate market.Imagine a fast developing country, which Mortgage System is about to be introduced into. Currently, it is possible to borrow home loans, however, these are short term (5-10 years max) and require %60 initial equity.
What would be the effects of such a system introduction on real estate market?
Further Demographic Information:
Current House Owners: %60
Current House Loan Rate: %3 (Only %3 purchase a house via loans. The rest is via upfront payment)
Current Interest Rate: %19-%20
Economic Stability: Recent economic crises in year 2000, property market has been down since, however, started to boom in 2004Although %60 of the population do own a house, only around %55 of them is actually legitimate. The rest is illegal housing, not approved by government.
Lets forget about the name and location of the country for the beginning of this topic and discuss.
Thanks for your time.
Regards
28 foxs last weekend.
Firstly, I find it very difficult for people who kill defenseless animals and call it sport!
Secondly, I think you will have problems securing a mortgage if most of the properties are illegal.
Finally, it sounds like a third world country or very poorly developed one to say they lease and I can’t see a majority being able to service any loans.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksOriginally posted by The Mortgage Adviser:
Secondly, I think you will have problems securing a mortgage if most of the properties are illegal.This may conclude as there could be strong capital gains against the properties, which are legitimate and insurable.
Got 28 last weekend.
Capital gains are only legitimate to the owner of the land.
Are you suggesting the Government or owners of the land with illegal housing located on it will just give the land to the squatters?
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential Links[biggrin]
maybe I shouldnt write anything about illegal housing.Forget about squatters and foxes for a second,
What would be the effects of introduction of Mortgage System on real estate market?
Got 28 last weekend.
Assuming there isn’t already lenders operating there, which is unlikely, it should increase demand and property prices as more people could afford to buy property.
The Mortgage Adviser
http://www.themortgageadviser.com.au
[email protected]
Essential LinksI’d imagine also that consumer spending would increase in general as more people (ie current land owners) found themselves with accessible equity. They could consolidate car loans, buy farm improvements, fund businesses etc…
Essentially I think by adopting a mortgage system an economy is creating wealth through increased ability to leverage existing resources. Like if the government here in Aus suddenly allowed us to mortgage our super funds. We’d all suddenly become wealthier (effectively) because we’d have greater access to existing wealth against which to leverage.
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