Financial vulnerability of mortgage owners and mortgage lenders
AbstractFrom a macroeconomic point of view, Dutch households are in a basically sound financial position.Nevertheless, at a microeconomic level substantial financial risks may exist. This report presents a profile of the most vulnerable households with special attention to the mortgage debt/house value ratio and the mortgage debt/household income ratio. The affordability of housing costs for households with a mortgage is assessed in the case of an increase in mortgage interest rates, a decline in house prices and a rise in unemployment. The risk that banks and other mortgage lenders may suffer infection of their mortgage portfolios - i.e. that the proceeds from sale of the house are insufficient to repay the mortgage loan - is also discussed.
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Bibliographic InfoPaper provided by Netherlands Central Bank, Research Department in its series WO Research Memoranda (discontinued) with number 706.
Date of creation: 2002
Date of revision:
financial vulnerability; payment problems for mortgagors; infection of mortgage portfolio;
Find related papers by JEL classification:
- D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
- 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
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Production Analysis, and Firm Location - - - Housing Supply and Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-06-16 (All new papers)
- NEP-CFN-2003-06-16 (Corporate Finance)
- NEP-GEO-2003-06-16 (Economic Geography)
- NEP-URE-2003-06-16 (Urban & Real Estate Economics)
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- Elmer Sterken, 2006. "Competition in the Dutch Mortgage Market," De Economist, Springer, vol. 154(4), pages 587-600, December.
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