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Housing Loan Repayment Behaviour in Malaysia: An Analytical Insight

Author

Listed:
  • Asish Saha

    (FLAME School of Business, FLAME University, India)

  • Hock-Eam Lim

    (School of Economics, Finance, and Banking, Universiti Utara Malaysia, Malaysia)

  • Goh-Yeok Siew

    (School of Economics, Finance, and Banking, Universiti Utara Malaysia, Malaysia)

Abstract

The present study aims to decipher the drivers of default status (no default, single default, double default, and default to good) of 43,156 home-loan borrowers of a large home-loan lender having a national presence during 2003-18. Using the Multinomial Logit model, we analyse the repayment behaviour controlling the borrowers' loan and socio-demographic characteristics. We find house equity, loan, and borrower characteristics,and ability to pay are the key determinants. We also find that both double default and first default are higher at lower growth rates of house prices. Non-linearity and the inflection points in the profile of age, loan age, loan term, payment to income ratio, loan to value ratio, and loan interest rates vis-a-vis loan default status are significant findings. Tapering-off of default due to seasoning beyond a threshold year is notable. The study is the first of its kind, which uses granular data in its analysis, and hence the results would prove immensely beneficial in the policy formulations and managerial decisions.

Suggested Citation

  • Asish Saha & Hock-Eam Lim & Goh-Yeok Siew, 2021. "Housing Loan Repayment Behaviour in Malaysia: An Analytical Insight," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 20(2), pages 141-159, September.
    • Handle: RePEc:ijb:journl:v:20:y:2021:i:2:p:141-159
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    References listed on IDEAS

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    1. Kim Sia Ling & Siti Suhana Jamaian & Syahira Mansur & Alwyn Kwan Hoong Liew, 2023. "Modeling Tenant’s Credit Scoring Using Logistic Regression," SAGE Open, , vol. 13(3), pages 21582440231, August.

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    More about this item

    Keywords

    Default Status; Home Equity; Housing Loan Default; Non-Linearity and the Points of Inflection; Multinomial Logit Model;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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