
Affordable homeownership isn’t just a challenge in the United States. From Australia to the European Union, nations worldwide grapple with how to expand homeownership and stimulate housing investment.
- This issue of Capital Commentary dives deep into housing challenges facing Australia and the EU, examining how their approaches compare and contrast with U.S. practices.
The verdict? Housing finance remains a puzzle, but solutions may lie in the U.S. model. Read on to explore how international policymakers can integrate these best practices into their frameworks.
1. Why Australia’s Free Mortgage Insurance Could Backfire
If you think U.S. housing costs are steep, Australia might just say, “Hold my Foster’s.”
By the numbers: Australia boasts four of the world’s 15 priciest cities: Sydney, Melbourne, Brisbane and Adelaide. Home prices here have surged 80% to 100% since 2021.
- In Sydney, where nearly 20% of Aussies reside, the median house price approaches $1.5 million — which is 13.8 times the median income for Sydney residents. By comparison, a median-priced house in Los Angeles is 12.5 times higher than the median income.
- Voters ranked housing costs as the top issue in the recent elections.
Labor Party’s promise: Led by Prime Minister Anthony Albanese, the party plans to offer free mortgage insurance (MI) to all first-time buyers.
- The existing Home Guarantee Scheme (HGS), created in 2020, provides free MI to a select group, with income caps and a limit of 50,000 units.
- By January 2026, these restrictions will be lifted.
The cure might be worse: Economists warn expanding the HGS could fuel demand and drive up home prices.
- It could also nationalize the nation’s private MI industry — which Australians call “lenders MI” — for first-time buyers, impacting firms like Arch LMI in Australia.
What experts say: “Any policy enabling higher payments for housing results in pricier homes, not increased ownership,” notes Saul Eslake, a principal at Corinna Economic Advisory.
Projected impact: HGS expansion could boost annual demand by up to 39,100 buyers, raising property prices by 3.5% to 6.6% in 2026 and beyond, forecasts Lateral Economics.
Why it matters: Australian taxpayers are left exposed.
- Unlike the U.S.’s FHA insurance, Australia lacks a reserve fund for loan defaults.
- In a downturn, taxpayers could face billions in liabilities.
Unequal effects: Wealthy borrowers, benefiting from the scheme, may edge out lower-income buyers amid rising prices.
- With just a 5% down payment and no mortgage insurance cost, they compete for limited homes.
Engage with Capital Commentary

Share your thoughts: We invite you to click here and share your insights on this issue.
Did you receive this issue as a forward? Click here to subscribe and receive future editions in your inbox.
Explore Arch MI Insights: Want to dive deeper? Click here to access past issues and listen to previous episodes of the Arch MI PolicyCast podcast.
2. Europe Eyes U.S. for Securitization Boost

A modernized securitization market in Europe could boost both home borrowing and the broader EU economy.
- And European leaders are looking to the U.S. financial markets for inspiration.
Why it matters: European banks need to free up €1 trillion annually to stay competitive globally.
- Restrictive securitization rules are, among other things, holding back insurers from participating, while U.S. counterparts are leading the way in this arena.
The European housing market: It’s fragmented compared to the U.S., with over 50% of EU bank balance sheets tied to mortgages, unlike the U.S. where 72% of mortgage credit is federally backed.
- Mortgage terms vary across the 27 EU countries, making standardization difficult across national borders.
- Outdated regulations hinder banks from securitizing mortgage assets.
American success story: In the U.S., reinsurers are vital partners to Fannie Mae and Freddie Mac.
- Post-2013, the U.S. required these agencies to share credit risk with private markets.
- Insurers now cover a substantial share of the risk.
Europe’s massive lag: U.S. insurers protect $64 billion in mortgage risk, while European insurers cover just €6 billion (equivalent to $6.88 billion) across all asset classes.
What policymakers are asking: “Are EU insurers interested in participating in Simple, Transparent and Standardized (STS) securitization?,” I was frequently asked as I made my way through a web of EU officials and country attaches on a recent trip to Brussels.
- By the numbers: There are 60 reinsurance companies that are participating in the United States credit-risk transfer market and not all are U.S. companies. So the interest is there, if regulations allow it.
Regulatory roadblock: The 2021 EU rules exclude insurers from the STS securitization market.
Path forward: The European Commission’s proposed legislation would open the STS market to insurers that meet safeguards to ensure safety and soundness of both insurance companies and banks.
- The complex approval process involves multiple EU bodies and will likely carry over until 2026.
Bottom line: Europe needs to unlock existing capital through smarter regulation to compete globally.
What they’re saying: “We need to change the emotion, the heat, the stigma” around securitization and focus on “what’s good for the Union,” says Regina Doherty, Irish Member of the European Parliament.

About Arch MI’s Capital Commentary
Capital Commentary newsletter reports on the public policy issues shaping the housing industry’s future. Each issue presents insights from a team led by Kirk Willison.
About Arch MI’s PolicyCast
PolicyCast — a video podcast series hosted by Kirk Willison — enables mortgage professionals to keep on top of the issues shaping the future of housing and the new policy initiatives under consideration in Washington, D.C., the state capitals and the financial markets.
Stay Updated
Sign up to receive notifications of new Arch MI PolicyCast videos and Capital Commentary newsletters.