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Establishment of Mortgage in Transition Economy.

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As we know, the acquirement of real estate is one of the most expensive goods. Its purchase, in fact, cannot be made by means of current incomes or accumulations of consumers. In new economic conditions therefore the problem of maintenance of the population with house cannot be solved without application of mechanism of long-term crediting. Most precisely constructed and fulfilled system of such a credit now is considered mortgage market. Mortgage lending enables to establish a long-term capital market, and solve housing problem that is very crucial in almost all transition countries. After corporate issues, mortgages are the most…
place. Second, there needs to be source of funds from either deposit or through subsidies. There is no lack of deposit sources in transition economies but the institutional developments must make mortgage holding as attractive as government securities. Finally, macroeconomic stability is required to encourage the use of long-term instruments. At instability of the financial markets the degree of risk raise in the process of increase in long-term operations. Therefore, not having reached macroeconomic stability it is difficult to develop the long-term financial markets as all financial organizations and institutions are engaged in short-term operations trying to avoid risk.



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