Mortgage Choice - The Danish Case
In this paper we analyze the mortgage choice faced by Danish borrowers. Based on an analysis of the most popular Danish mortgage products, we argue that Adjustable-Rate Mortgages (ARM) with life time caps will combine the most attractive features from straight ARMs and callable Fixed-Rate Mortgages (FRM). Furthermore, we find the delivery option embedded in Danish mortgages to be an important feature, which protects households from the risk of insolvency by facilitating a closer match between assets and liabilities in the household portfolio.
|Date of creation:||09 May 2002|
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- John Y. Campbell & Joao F. Cocco, 2002.
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Harvard Institute of Economic Research Working Papers
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