The German Property Market – Guaranteeing the Sustained Value of Mortgage Pfandbriefe

Susanne Giesemann und Christoph Kettel, Eurohypo AG

The fallout of the financial and economic crisis played a considerable part in the recent success story of the Mortgage Pfandbrief, long decried as boring. In view of the current increase in investors’ risk awareness, however, the Pfandbrief is held in high esteem not just as a sound and favor-ably priced refinancing instrument for the issuing financial institutions but also as an investment product with a stable value.The attraction can be explained not only by the statutory requirements that govern the issuance of Pfandbriefe and the determination of the mortgage lending value (MLV): particularly in downswing phases, it is above all the sustained value of the cover pools that convinces. A closer look at the German property market – by international comparison and in terms of the develop-ment of individual market segments – testifies to the attractiveness of this debt instrument. After all, German properties account for around 80% of the cover for Mortgage Pfandbriefe.