Income Volatility and Residential Mortgage Delinquency: Evidence from 12 EU Countries
AbstractWe investigate the socio-economic determinants of mortgage delinquency in 12 EU countries and observe that income volatility significantly increases the mortgage delinquency risk. This pattern even holds for borrowers with higher-income profiles if volatility in income is high enough. From this result we can draw the following conclusions: i) mortgage protection insurance policies might be failing to cover those borrowers most in need; ii) the existence of credit market imperfections, and; iii) the inability for a number of borrowers most at income risk to accumulate precautionary savings in order to meet mortgage payments when shocks in income arise.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1396.
Length: 42 pages
Date of creation: Nov 2004
Date of revision:
Publication status: published as 'Income volatility and residential mortgage delinquency across the EU' in: Journal of Housing Economics, 2005, 14 (3), 153-177
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Find related papers by JEL classification:
- D1 - Microeconomics - - Household Behavior
- R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
- J0 - Labor and Demographic Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-11-22 (All new papers)
- NEP-EEC-2004-11-22 (European Economics)
- NEP-GEO-2004-11-22 (Economic Geography)
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