As emerging economies face population growth, rapid urbanization, and rising expectations from a growing middle class, the need for robust housing finance systems becomes very important. When housing finance systems are strong, families can more readily access comfortable homes, and have another vehicle for accumulating long-term wealth.

Housing Finance Program Introduction: Providing Affordable Housing to the Middle- and Low-Income Population (PDF)

Making the case for Housing Finance: When housing finance works well, it contributes to economic growth and household savings, and it can help households be more resilient to economic shocks. However, when the financial system does not provide funding at affordable conditions, certain problems arise. For example, only the top income groups can afford comfortable housing and build up real estate assets, which widens the gap between rich and poor. Most households remain in sub-standard conditions which, at best, are improved incrementally over many years. As a result, governments may intervene to provide assistance to a large share of the population, and may do so in excess of the public financing capacity, leading to negative social and financial repercussions.

The role of the World Bank: The Housing Finance Program helps client countries reform or develop market-based systems that are able to cater to a large portion of the demand and enable governments to focus on the neediest groups. In that endeavor, a critical challenge is to deal with the under developed state of the capital markets, which does not provide sufficient resources of required maturities. The housing finance team also advises policymakers and regulators with other issues, such as strength of market infrastructure (legal status of property rights, land registration systems, enforcement of mortgage collaterals), efficiency and risk management capability of lending systems, adjustment of savings and lending products to instable environments, efficiency of subsidy schemes, and adequacy of regulatory and supervisory frameworks.

The Evolution of Covered Bonds through the Crisis. Paul O'Connor's presentation covers the impact and lessons of the global financial crisis on covered bonds (CBs) looking at market activity and the increased role of the Central Banks in the Covered Bond marketplace. He also covers the quasi disappearance of structured CBs, extension of specialized legal frameworks, as well as new initiatives towards higher quality. Paul is the Head of Wholesale Banking and Risk of the Irish Banking Federation, and Chairman of the European Legislation Working Group and Deputy Chairman Elect, European Covered Bond Council (ECBC). Presentation (PDF Document) 

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