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Financial vulnerability of mortgage owners and mortgage lenders

Author

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  • M.C.J. van Rooij

Abstract

From a macroeconomic point of view, Dutch households are in a basically sound financial position.Nevertheless, at a microeconomic level substantial financial risks may exist. This report presents a profile of the most vulnerable households with special attention to the mortgage debt/house value ratio and the mortgage debt/household income ratio. The affordability of housing costs for households with a mortgage is assessed in the case of an increase in mortgage interest rates, a decline in house prices and a rise in unemployment. The risk that banks and other mortgage lenders may suffer infection of their mortgage portfolios - i.e. that the proceeds from sale of the house are insufficient to repay the mortgage loan - is also discussed.

Suggested Citation

  • M.C.J. van Rooij, 2002. "Financial vulnerability of mortgage owners and mortgage lenders," WO Research Memoranda (discontinued) 706, Netherlands Central Bank, Research Department.
  • Handle: RePEc:dnb:wormem:706
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    Cited by:

    1. Elmer Sterken, 2006. "Competition in the Dutch Mortgage Market," De Economist, Springer, vol. 154(4), pages 587-600, December.

    More about this item

    Keywords

    financial vulnerability; payment problems for mortgagors; infection of mortgage portfolio;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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