House mortgage refers to the loans provided by banks who obtain the debtors’ property house property or other effective bonds through certain contracts, which aims to ensure the loans’ security. Actually, it operates mainly in this way: the debtors transfer the property ownership to creditors through legal means. In the process of mortgage, the creditors are entitled to manage the guaranty if the debtors cannot repay the creditor and interest on time, which provides an effective guarantee for creditors to call in the loan. Adopting a house mortgage tends to be based on the security, mobility and profitability of banks’ operation fund. Because the debtors’ of housing mortgage are almost resident individuals, whose capital strength is not clear, and this has increased the risk of banks loan. Therefore, house mortgage can be regarded as a legal guarantee under the condition of high loan risks. The house mortgage is different from second-hand housing loan and one-hand loan, and it mainly lies in the debtors have possessed the house ownership instead of being about to possess it. What’s more, the house mortgage should have specific loan purpose and it cannot be utilized as the purpose, which is forbidden in the laws. For example, real estate and stocks are not allowed, and the banks are entitled to retrieve the loans.
The development of real estate is characterized by large investment volume, long-term construction, and plenty of funds should be put into every link. It is difficult to maintain the operation of real estate only depending on the developers’ funds. The house loans in some countries have accounted for 30 percent of overall loan gross. From the practice of every country’s housing commercialization development, buying a house is not an easy task. Therefore, housing mortgages will be of great help for residents to realize the housing dream a reality. As a consumption commodity, the house has entered thousands of families through the reform of the housing system, and its market and development potential are large. In addition, professional banks have been plagued by credit risks in some countries, and the implementation of mortgage loans has become the main way to reduce credit risk. Carrying out a loan mortgage business and using real estate as a mortgage can minimize credit risk. Moreover, banks can use this loan method to expand their financial strength.
While promoting the development of the real estate market system, housing mortgage loans are also an effective tool for the government to carry out macroeconomic regulation and control. Generally, the government adjusts the lack of funds in the housing finance market so as to realize countries’ industrial policy aims by adjusting the credit rate, credit amount, and mortgage term. In developed countries, most resident houses are purchased by loans on the mortgage, thus leading to negative saving and forced saving by borrow money to buy houses from the point of essence. Since this kind of post-consumption saving is realized through the alternative saving function of credit, when the national economy is overheated due to the expansion of demand, the alternative savings function of the mortgage can attract the residents’ money to the housing consumption. This will reduce the total consumption demand and avoid excessive economic fluctuations caused by demand changes in economic development. Therefore, from the perspective of utilizing the house mortgage to adjust the national economic development, accelerate the cultivation of housing finance system has far-reaching practical significance for improving financial market and promoting economic development. House mortgage loan will be helpful to improve the living conditions and standardize the living level. For example, house mortgage can not only satisfy the residents’ housing requirements but also improve the living level in the United States. At the end of 1999, the second-class of house mortgage in the USA reached up to more than 7.5 trillion dollars. The living conditions of 55 square meters per capita will be difficult to realize without the support of house finance. Similarly, many residents didn’t have houses to live in the past in many countries.
Nowadays, almost all residents have room to live, and quite a lot of residential houses are more spacious. Besides, they are pursuing the elegance and harmony of the residential environment. Although this phenomenon is closely related to the improvement of residents’ income level, it is also inseparable from the development of housing finance, especially housing mortgage loans. The practice has proved that not only countries with high-income levels can improve people’s living conditions through housing mortgage loans, but low-income countries such as Singapore and Brazil have also achieved considerable results through this approach.
The interests of three parties of house buyers, banks, and developers are involved in house mortgage. We should continuously improve the house mortgage policy in order to minimize the loans’ risks. All three parties should properly handle the relationship among the three parties. Risks should be fully considered in house mortgage so that risk control can be strengthened. Besides, the banks ought to improve the assortments of house mortgage to meet the different needs of residents in order that the safety of house mortgage can be guaranteed and the transaction of house mortgage can be developed.