Having a look at the popular definitions dealing with the topic real-estate credit, one is confronted with a wide variety of different explanations. One obstacle while searching for a suitable definition of the German termRealkredit(real-estate credit) is the fact that this term is in Germany rather known under the nameHypothekendarlehen(mortgage loan). Though one also finds the word ‘Realkredit’ in the relevant literature as well as in numerous other sources of definitions, it is not known in the vernacular.
In Denmark the situation is completely different. Here, the termrealkreditbelongs to the mortgaging as the house to the property. Moreover, it is also known in the general language use including compound nouns such asrealkreditlån(real-estate loan) orrealkreditlov(real-estate credit act).
Whether one is more cotton on to the term ‘real-estate credit’ or ‘mortgage loan’ or even ‘hypothecary credit’ (in German:Hypothekarkredit)is entirely up to the reader, although we later see that there is a difference between these terms. For the sake of a better comprehension, the words ‘real-estate credit’, ‘credit on real estate’ and sometimes also ‘real-estate loan’ will be used in the further discussion with a few exceptions regarding extracts and quotations. As far as the explicit definition of the real-state credit is concerned, authors in both countries agree upon a more or less identical explanation. In Germany’s major reference book, the Brockhaus-encyclopaedia (1996, vol. 18, p. 109), one speaks about a“credit that is granted for the security of tangible assets (real estate)”.A slightly extended definition can be found on the internet platform of the Duden. Here, one describes the term as a“loan at which the debtor guarantees the repayment with real estate or other assets”.
Table of Contents
1. Placement of the Credit on Real Estate
1.1. General Disambiguation
1.2. The Term ‘Realkredit’ in Germany
1.3. The Term ‘Realkredit’ in Denmark
2. The Granting of Real-estate Loans
2.1. Real-estate Credit Institutions in Germany
2.1.1. Realkreditinstitut or Hypothekenbank ?
2.1.2. The Importance of Real-estate Credit Institutions as Specialised Commercial Banks
2.1.3. Private Mortgage Banks
2.1.4. The Legal Restrictions of Mortgage Banks
2.1.5. The 21 Members of the Association of German Mortgage Bank
2.1.6. Historical Development
2.1.7. The German Pfandbrief
2.1.8. The German Mortgage Bank Act (HBG)
2.1.9. Pfandbrief-Rating of the German Mortgage Banks
2.2. Real-estate Credit Institutions in Denmark
2.2.1. The Real-estate Credit of the Danish ‘realkreditinstitutter’
2.2.2. The 8 Danish Mortgage Banks
2.2.3. Historical Development
2.2.4. The Danish Mortgage Credit Act
2.2.5. The Rating of Danish Mortgage Bonds
3. Importance of the German and Danish Credit on Real Estate and its Advantages over other Forms of Financing
3.1. Alternatives in the Field of Construction Financing in Germany
3.1.1. The Mortgage Loan as the Non plus ultra in Construction Financing?
3.1.2. Loans from Building Societies
3.1.3. Endowment Mortgage
3.1.4. Two-way Financing via Investment Funds
3.1.5. Summary
3.2. Alternatives in the Field of Construction Financing in Denmark
3.2.1. The Unrivalled Mortgage Credit?
3.2.2. Loans from Danish Saving Banks
3.2.3. Additional Loaners
3.3. Summary of the Importance of the German and Danish Real-estate Credit
4. The Real-estate Credit in Practice
4.1. General Considerations as to the German and Danish Construction Financing
4.1.1. Business Environment
4.1.2. Reasons for the Different Proportion of Proprietary
4.2. Real-estate Credit Financing in Germany
4.2.1. The Annuity Loan in Practice
4.3. Real-estate Credit Financing in Denmark
4.3.1. Danish Loan Types in Practice
5. The Future of the Real-estate Credit as an important Instrument in the Field of Construction Financing
5.1. The Future of the Real-estate Credit in Germany
5.1.1. Standardisation as to the Granting of Real-estate Loans
5.1.2. The German Pfandbrief as an Export Hit
5.1.3. New Ways of Real-estate Financing – Vision or Reality?
5.2. The Future of the Real-estate Credit in Denmark
5.2.1. Standardisation – No foreign Word in Denmark
5.2.2. The Saturated Danish Market
5.2.3. The Danish Credit on Real Estate becomes international
6. Summary
Research Objectives and Themes
This paper aims to examine and analyze the significance and local value of real-estate credit as a financing instrument for construction in Germany and Denmark. It addresses disparities in the granting of such loans, explores the influence of historical developments and legal foundations, and evaluates the national and international importance of the credit institutions involved.
- Comparison of real-estate credit systems in Germany and Denmark.
- Role and legal frameworks of real-estate credit institutions (e.g., mortgage banks).
- Comparative analysis of financing instruments and loan types, including Pfandbriefe and mortgage bonds.
- Economic and structural determinants influencing construction financing.
- Future perspectives on internationalization and standardization in the mortgage market.
Excerpt from the Book
1.1. General Disambiguation
Having a look at the popular definitions dealing with the topic real-estate credit, one is confronted with a wide variety of different explanations. One obstacle while searching for a suitable definition of the German term Realkredit (real-estate credit) is the fact that this term is in Germany rather known under the name Hypothekendarlehen (mortgage loan). Though one also finds the word ‘Realkredit’ in the relevant literature as well as in numerous other sources of definitions, it is not known in the vernacular.
In Denmark the situation is completely different. Here, the term realkredit belongs to the mortgaging as the house to the property. Moreover, it is also known in the general language use including compound nouns such as realkreditlån (real-estate loan) or realkreditlov (real-estate credit act).
Whether one is more cotton on to the term ‘real-estate credit’ or ‘mortgage loan’ or even ‘hypothecary credit’ (in German: Hypothekarkredit) is entirely up to the reader, although we later see that there is a difference between these terms. For the sake of a better comprehension, the words ‘real-estate credit’, ‘credit on real estate’ and sometimes also ‘real-estate loan’ will be used in the further discussion with a few exceptions regarding extracts and quotations.
Summary of Chapters
1. Placement of the Credit on Real Estate: This chapter defines the core terminology used for real-estate credit in both Germany and Denmark to establish a common understanding for the subsequent comparative analysis.
2. The Granting of Real-estate Loans: This chapter analyzes the specialized banking institutions in Germany and Denmark, their legal foundations, and the mechanisms used to grant real-estate loans.
3. Importance of the German and Danish Credit on Real Estate and its Advantages over other Forms of Financing: This chapter compares mortgage loans with alternative construction financing methods, highlighting the structural advantages of the credit on real estate.
4. The Real-estate Credit in Practice: This chapter provides practical examples and examines the different economic environments and household behaviors in Germany and Denmark regarding real estate ownership.
5. The Future of the Real-estate Credit as an important Instrument in the Field of Construction Financing: This chapter discusses trends such as standardization, internationalization, and new visionary financing models that are shaping the future of real-estate credit.
6. Summary: This concluding chapter synthesizes the main findings, reaffirms the central role of real-estate credit systems, and offers an outlook on future market developments.
Key Terms
Real-estate credit, Mortgage loan, Realkredit, Pfandbrief, Mortgage bank, Construction financing, Land register, Legal framework, Comparative analysis, Interest rates, Debt redemption, Bond markets, Financial standardization, Internationalization, Institutional role.
Frequently Asked Questions
What is the primary focus of this research?
The research provides a detailed comparative analysis of real-estate credit systems and their roles in construction financing within Germany and Denmark.
What are the central topics addressed in the paper?
The core topics include the definition of real-estate credit, the structure and legal regulation of mortgage credit institutions, specific loan products, and the comparative economic significance of these systems.
What is the primary research goal?
The goal is to identify and analyze disparities in how real-estate loans are granted and to determine how national differences, rooted in history and law, influence the importance of these instruments.
Which scientific methods are utilized?
The paper employs a comparative legal and economic approach, synthesizing definitions, regulatory analysis (such as mortgage bank acts), and statistical indicators to evaluate the respective systems.
What does the main body of the work cover?
The main body covers the institutional landscape (mortgage banks), the historical evolution of Pfandbriefe and Danish mortgage bonds, alternative financing methods, and practical case studies for home buyers.
Which keywords characterize this work?
Key terms include real-estate credit, mortgage loan, Pfandbrief, construction financing, legal regulation, comparative finance, and institutional banking.
How do German and Danish mortgage bonds differ?
While both systems use real estate as collateral, Germany relies on the Pfandbrief as a specific refinancing instrument with a long tradition, whereas the Danish system utilizes specialized mortgage bonds (realkreditobligationer) with unique balance principles.
What impact does the "new Pfandbrief Act" have on the German market?
The act, intended to be enacted in 2005, aims to standardize requirements for issuing Pfandbriefe, opening the market to more institutions while potentially ending the traditional "special bank principle" for existing mortgage banks.
- Quote paper
- Stephan Dannehl (Author), 2004, The Credit on Real Estate - Local Value and Relevance for the Construction Financing in Germany and Denmark, Munich, GRIN Verlag, https://www.grin.com/document/48254
