Mortgage reforms crucial for economic stability, says European mortgage chief

Housing finance is not just about homeownership — it is a pillar of economic and social stability, according to European Mortgage Federation – European Covered Bonds Council (EMF-ECBC) secretary general Luca Bertalot.

Speaking at the Mortgage Market Global Summit, Bertalot emphasized that housing accounts for 44 percent of Europe’s GDP, demonstrating its critical role in driving economic growth and labor mobility.

He warned, however, that long-term mortgage financing remains fragile, often becoming the first casualty of economic crises.

“We learned this lesson in 2008, and we’ve seen it happen repeatedly worldwide,” Bertalot said.

“The challenge today is building macroeconomic support that translates into real benefits for households," he added.

Bertalot underscored the importance of regulatory frameworks that attract investors and stabilize mortgage markets.

He pointed to covered bonds — a financing instrument with centuries-old roots in Germany — as a proven way to secure affordable, long-term housing finance.

Unlike other asset-backed securities, covered bonds offer dual recourse, providing added security to investors while ensuring lower borrowing costs for homebuyers.

“In times of crisis, covered bonds have consistently been the first market to reopen,” Bertalot noted.

“They provide stability, predictable funding costs, and investor confidence.”

However, he stressed that no single financing tool is a silver bullet.

Countries need a diverse range of options — including securitization and microfinance solutions — to address different market needs.

He also called for stronger regional cooperation, citing the success of European investors in Singapore and South Korea, where standardized regulations have removed barriers to cross-border investments.

For developing markets like the Philippines, Bertalot said attracting global investors requires robust legal protections and regulatory consistency.

Without these safeguards, he warned, foreign capital will remain hesitant to enter emerging mortgage markets.

“If you want to convince investors to come in, you need to ensure they are protected if things go wrong,” he said.

“Legislation, supervision, and best practices must be in place.”

Bertalot urged mortgage refinancing companies and regulators to take the lead in shaping policies that promote financial stability and consumer protection.

With proper reforms, he said, mortgage markets can drive not only economic growth but also social cohesion by giving people a tangible stake in their future.