Competing Risks of Mortgage Termination: Who Refinances, Who Moves, and Who Defaults?
Why, when, and who terminates their mortgages? The primary reasons for mortgage termination are refinancing, selling of the property, and default. This article is the first to explicitly model these competing risks within a unified conceptual framework and provide a link between theoretical value-maximizing mortgage-termination models and empirical estimation. I find, for instance, that the refinancing risk is highly sensitive to interest-rate changes and other variables capturing the value of the mortgage. On the other hand, the necessity to relocate, either through sale of the property of default, is sensitive to the local economic conditions but largely independent of the value of the mortgage. Furthermore, I explicitly model the spatial distribution of the mortgage-termination risks. This approach captures striking spatial patterns of mortgage termination. It also mitigates, at least partially, one of the biggest obstacles to mortgage termination estimation: omitted variables. Copyright 2001 by Kluwer Academic Publishers
Volume (Year): 23 (2001)
Issue (Month): 2 (September)
|Contact details of provider:|| Web page: http://www.springer.com|
|Order Information:||Web: http://www.springer.com/economics/regional+science/journal/11146/PS2|
When requesting a correction, please mention this item's handle: RePEc:kap:jrefec:v:23:y:2001:i:2:p:185-211. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.