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Title:Income Volatility and Residential Mortgage Delinquency : Evidence from 12 EU Countries PDF Logo
Authors:Diaz-Serrano, Luis
Issue Date:2004
Series/Report no.:IZA Discussion paper series 1396
Abstract:We 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.
Subjects:income volatility
mortgage delinquency
mortgage insurance
homeownership
payment-to-income ratio
credit market imperfections
JEL:J0
R0
D1
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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