European Housing and Mortgage Market Shows First Consequences of COVID-19 Outbreak in Q1 2020
Brussels, 16 July 2020 – For immediate release
The European Mortgage Federation (EMF) is delighted to announce the publication of its Quarterly Review of European Mortgage Markets for the first quarter (Q1) of 2020.
Produced in cooperation with the Federation’s national experts, the Quarterly Review provides the latest short-term developments in mortgage and housing markets across the EU.
The publication highlights expert analytical commentary together with data tables and charts on the following key indicators:
- Total outstanding residential mortgage lending;
- Gross and net residential mortgage lending;
- Regulation & Government intervention;
- Nominal house price indices; and
- Mortgage interest rates;
Key highlights for Q1 2020 Quarterly Review
General Remark:
Please, note that in this quarter’s edition we have rebased our House Price Index in order to be aligned with Eurostat figures. The base year is now 2015.
Macroeconomic context:
- Macroeconomic figures in the first quarter of 2020 overall reflect a deterioration of the European economy. Despite a more stable evolution in January and February the impact of the COVID-19 outbreak significantly impacted the economy in March. GDP fell by almost 4% with respect to the end of 2019 and it is expected to further decrease in 2020.
Market developments:
The evolution of the market in Q1 2020 was characterised by the following:
- The mortgage market experienced an important slow-down as a consequence of the pandemic outbreak. Outstanding mortgage loans grew by 3.5% on a yearly basis, however, the quarterly growth was almost non-existent with only a 0.15% increase. Outstanding mortgage loans at the end of Q1 2020 reached EUR 7.35 tn. A similar trend is observed in relation to new lending, gross residential lending grew by over 12% on a yearly basis, but in quarterly terms it experienced a fall of almost 12%. This marks the biggest drop in quarterly terms since Q1 2014.
- The evolution of housing supply has been heterogenous within the sample. Similarly, house price dynamics have followed different trends. However, on average house prices continued to grow by 4.4% y-o-y and 1% q-o-q.
- Q1 2020 is probably one of the quarters with the highest level of government intervention in recent memory. Most European Governments introduced macroeconomic measures to alleviate the economic effects of COVID-19. The vast majority of European countries approved moratoria to support households and businesses.
- Most jurisdictions recorded very low interest rate levels, continuing the decreasing trend of the previous quarters. The sample’s unweighted average presents a new all-time low at 2.1%.
