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 Department of Economics, Finance and Accounting, National University of Ireland - Maynooth in its series Economics, Finance and Accounting Department Working Paper Series with number n1530205.
Length: 41 pages
Date of creation: Feb 2005
Date of revision:
Income volatility; mortgage delinquency; mortgage insurance;
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-2005-09-29 (All new papers)
- NEP-EEC-2005-09-29 (European Economics)
- NEP-IAS-2005-09-29 (Insurance Economics)
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