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Belgium

Housing Finance Market Overview

In Belgium, housing finance is mainly raised from banks, with the BNP Paribas Fortis bank taking the largest market share. The housing finance market has seen a moderate growth since the year 2000. The mortgage debt to GDP ratio increased from 27.8 per cent in 2000 to 36.6 per cent in 2007.

The Market from the Perspective of the Demand Side

In Belgium, the usual maximal loan-to-value ratio amounts to 75 per cent (85 per cent of the theoretical auction proceeds which normally equal to 90 per cent of the property value). The market share of fixed interest rate mortgages reached over 85 per cent in 2007. If a mortgage has been taken out for the construction/acquisition of an owner-occupied housing a flat rate can be deducted from tax for 10 years. The amount of the lump sum deduction depends on family size.

House Price Development

Housing prices have risen considerably since the year 2000 with an average annual growth rate of 8 per cent till 2007. So far, the financial crisis has only reduced the rate of the house price growth.

Refinancing Instruments

Deposits are for the banks the main source of funding for their mortgage market activities. The securitisation of mortgages plays with 5 per cent of the outstanding residential mortgage debt only a minor role in Belgium. Covered Bonds are not issued due to the lack of respective legislation. 

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