Mortgage Choice - The Danish Case
AbstractIn this paper we analyze the mortgage choice faced by Danish borrowers. Based on an analysis of the most popular Danish mortgage products, we argue that Adjustable-Rate Mortgages (ARM) with life time caps will combine the most attractive features from straight ARMs and callable Fixed-Rate Mortgages (FRM). Furthermore, we find the delivery option embedded in Danish mortgages to be an important feature, which protects households from the risk of insolvency by facilitating a closer match between assets and liabilities in the household portfolio.
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Bibliographic InfoPaper provided by University of Aarhus, Aarhus School of Business, Department of Business Studies in its series Finance Working Papers with number 02-22.
Length: 25 pages
Date of creation: 09 May 2002
Date of revision:
Contact details of provider:
Postal: The Aarhus School of Business, Fuglesangs Allé 4, DK-8210 Aarhus V, Denmark
Fax: + 45 86 15 19 43
Web page: http://www.asb.dk/about/departments/bs.aspx
More information through EDIRC
Mortgage; Choice; Valuation; Delivery Option; Prepayment;
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- John Y. Campbell & Joao F. Cocco, 2002.
"Household Risk Management and Optimal Mortgage Choice,"
Harvard Institute of Economic Research Working Papers
1946, Harvard - Institute of Economic Research.
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