Mortgage Lending
Mortgage lending refers to the provision of loans secured by residential or commercial property.
Meaning in Practice
Banks issue mortgages to finance property purchases, using the property as collateral. Mortgage terms include interest rates, maturity, and repayment structures. Credit assessments evaluate borrower income, collateral value, and risk exposure.
Why It Matters
Mortgage lending is a major component of bank loan portfolios and household debt. It influences housing markets, consumption, and financial stability. Excessive mortgage growth can contribute to property bubbles.
Market Impact
Changes in mortgage rates directly affect housing demand and construction activity. Rising defaults can weaken bank balance sheets and increase systemic risk. Mortgage market trends often influence broader economic conditions.
Example
A bank provides a 25-year fixed-rate mortgage to a household purchasing a residential property.