How many in negative equity? The role of mortgage contract characteristics
AbstractAn important precondition for mortgage default is that the borrower currently have negative equity, that is, that the mortgage balance be higher than the value of the property. This feature shows how sensitive the percentage of households in negative equity can be to different aspects of the mortgage contract. The recent large rise in mortgage delinquency and default rates in the United States, compared with the situation in other countries, can be partly explained by the fact that US mortgages were more likely to have characteristics that increased the incidence of negative equity.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Bank for International Settlements in its journal BIS Quarterly Review.
Volume (Year): (2008)
Issue (Month): (December)
Find related papers by JEL classification:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Benito, Andrew, 2006. "The down-payment constraint and UK housing market: Does the theory fit the facts?," Journal of Housing Economics, Elsevier, vol. 15(1), pages 1-20, March.
- Fernando Ferreira & Joseph Gyourko & Joseph Tracy, 2008.
"Housing Busts and Household Mobility,"
NBER Working Papers
14310, National Bureau of Economic Research, Inc.
- Kelly D. Edmiston & Roger Zalneraitis, 2007. "Rising foreclosures in the United States: a perfect storm," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 115-145.
- Deng, Yongheng & Quigley, John M. & Van Order, Robert & Mac, Freddie, 1996.
"Mortgage default and low downpayment loans: The costs of public subsidy,"
Regional Science and Urban Economics,
Elsevier, vol. 26(3-4), pages 263-285, June.
- Yongheng Deng & John M. Quigley & Robert Van Order, 1995. "Mortgage Default and Low Downpayment Loans: The Costs of Public Subsidy," NBER Working Papers 5184, National Bureau of Economic Research, Inc.
- Luci Ellis, 2008.
"The housing meltdown: Why did it happen in the United States?,"
BIS Working Papers
259, Bank for International Settlements.
- Luci Ellis, 2010. "The Housing Meltdown: Why Did It Happen in the United States?," International Real Estate Review, Asian Real Estate Society, vol. 13(3), pages 351-394.
- Foote, Christopher L. & Gerardi, Kristopher & Willen, Paul S., 2008.
"Negative equity and foreclosure: Theory and evidence,"
Journal of Urban Economics,
Elsevier, vol. 64(2), pages 234-245, September.
- Christopher L. Foote & Kristopher Gerardi & Paul S. Willen, 2008. "Negative equity and foreclosure: theory and evidence," Public Policy Discussion Paper 08-3, Federal Reserve Bank of Boston.
- Adam B. Ashcraft & Til Schuermann, 2008.
"Understanding the securitization of subprime mortgage credit,"
318, Federal Reserve Bank of New York.
- Ashcraft, Adam B. & Schuermann, Til, 2008. "Understanding the Securitization of Subprime Mortgage Credit," Foundations and Trends(R) in Finance, now publishers, vol. 2(3), pages 191-309, June.
- Haughwout, Andrew & Peach, Richard & Tracy, Joseph, 2008.
"Juvenile delinquent mortgages: Bad credit or bad economy?,"
Journal of Urban Economics,
Elsevier, vol. 64(2), pages 246-257, September.
- Andrew Haughwout & Richard Peach & Joseph Tracy, 2008. "Juvenile delinquent mortgages: bad credit or bad economy?," Staff Reports 341, Federal Reserve Bank of New York.
- Kerry D. Vandell & Thomas Thibodeau, 1985. "Estimation of Mortgage Defaults Using Disaggregate Loan History Data," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 13(3), pages 292-316.
- Diaz-Serrano, Luis, 2005. "Income volatility and residential mortgage delinquency across the EU," Journal of Housing Economics, Elsevier, vol. 14(3), pages 153-177, September.
- Kennedy, Gerard & McIndoe Calder, Tara, 2011. "The Irish Mortgage Market: Stylised Facts, Negative Equity and Arrears," Research Technical Papers 12/RT/11, Central Bank of Ireland.
- Duffy, David & O'Hanlon, Niall, 2013. "Negative Equity in the Irish Housing Market: Estimates Using Loan Level Data," Papers WP463, Economic and Social Research Institute (ESRI).
- Duffy, David, 2012. "Irish Housing: A Role for Loan-to-Value Limits?," Papers EC7, Economic and Social Research Institute (ESRI).
- Luci Ellis & Mariano Kulish & Stephanie Wallace, 2012. "Property Market Cycles as Paths to Financial Distress," RBA Annual Conference Volume, in: Alexandra Heath & Frank Packer & Callan Windsor (ed.), Property Markets and Financial Stability Reserve Bank of Australia.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Timo Laurmaa).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.