Mortgage markets: Why US and EU markets are so different

The US mortgage market has been characterised by a number of factors that h ave encouraged the growth of securitisation and this, in turn, has substant ially reduced the need for mortgage lenders to hold own funds. The situatio n in Europe is rather different (see Boleat, 1985; Coles, 1999; European Mo rtgage Federation 1996). This paper looks at the key differences between th e US and Europe, their implications with regard to capital adequacy regulat ion and why a similar evolution for Europe seems unlikely.