Household mortgage

Chapter 33 - Financial crisis. After studying this chapter you will be able to understand: What role irrational expectations and leverage play in financial crises? What role mortgage-backed securities and tranching played in the rise of subprime lending? How to analyze the factors that lead to the housing bubble and increased household debt?...

10p koxih_kothogmih6 22-09-2020 13 0   Download

Study on household mortgage has profound significance to better understand the economics. This paper finds that the household mortgage plays a positive role on consumption by examining the data of CFPS in 2018. Using the model that introduces interaction term, we argue that the mortgage has an income-effect for the comparatively low interest rate. The empirical result also shows the income-effect is greater in the “initiative mortgage households”.

14p nguyenanhtuan_qb 09-07-2020 11 2   Download

Household finances and attitudes also bear heavily on the housing market, which has generally remained depressed. In particular, home sales dropped sharply following the recent expiration of the homebuyers’ tax credit. Going forward, improved affordability--the result of lower house prices and record-low mortgage rates--should boost the demand for housing. However, the overhang of foreclosed-upon and vacant housing and the difficulties of many households in obtaining mortgage financing are likely to continue to weigh on the pace of residential investment for some time yet. ...

56p trinhcaidat 22-04-2013 36 2   Download

In section 1 the developments of the mortgage markets have already been extensively discussed. In this section attention is being drawn to the well-known fact of maturity mismatches. The mortgage product requires a risk commitment from one bank, non-bank or another for nearly always 25 years or longer. Banks and building societies in the U.K., as elsewhere, do not have funds available which are committed for 25 years, not even their own equity resources as recent banking losses have shown. Individual households are generally unable to repay their mortgages any faster.

29p hoangphiyeah1tv 18-04-2013 47 3   Download

In the U.K., the owners’ equity as a percentage of household real estate is not calculated in the Households’ net worth by asset and year statistics, unlike in the U.S Balance Sheet of Households and Nonprofit Organizations9 . However one can deduce from the available U.K. data that new housing starts from 2008 till 2011 have not led to an increased level of outstanding home loans. This means that individual households have repaid home mortgages and saved more to an extent of about £78.8 billion for the four year period 2008 to 2011. At the same time they have...

12p hoangphiyeah1tv 18-04-2013 71 3   Download

In the U.S the turn around from increasing to lower levels in outstanding mortgages went even further than in the U.K. In the U.S. individual households reduced their home mortgage level by about $1 trillion in the period 2008 to Q3 2012.This represented about 10% of all outstanding home mortgages. The pressure of selling off “repossessed homes” was also much stronger than in the U.K. In the U.S. 5.35 million second hand homes were brought into the housing market since 2006. This should be compared to the housing need of about 1.6 million new homes per annum in...

5p hoangphiyeah1tv 18-04-2013 43 3   Download

A drop in real income is bad enough, but individual households can make it worse by changing their collective savings behaviour. They have done so by turning home equity into consumption in the period 2003-2007 and started adding equity out of reduced incomes over the period 2008-2012. During the latter period banks became more cautious in their mortgage lending behaviour as evidenced by the substantial drop in new home mortgages granted, but new homes were still being built, so the total value of all homes did go up due to the home additions. If -as an approximate figure- one...

19p hoangphiyeah1tv 18-04-2013 71 4   Download

Another important point made in the FSA study is the reason that some individual households find it hard to keep up with their home mortgage payments. Adverse life events were mentioned by individual households as the reason that these households had difficulties in paying back outstanding debt. 32% explained that unemployment was the reason, 26% quoted relationship break-downs, 15% serious ill health/accidents, 11% care for children and 7% partner’s health or accident.

4p hoangphiyeah1tv 18-04-2013 51 2   Download

The study also analyses the lending structure which most likely has contributed to the rise in house prices. Such price rises exceeded the growth in income levels. The FSA contributes these developments to the deterioration in lending standards, which not only happened in the U.K., but also in the U.S., Ireland and Spain for instance. Such practices were originated by lenders -to some extent non-bank lenders- which took mortgage risks on individual households which could be classified as high risk borrowers.

7p hoangphiyeah1tv 18-04-2013 51 4   Download

Some proposals have been formulated in this paper. They cover home mortgage lending, which deals with the most important fixed asset for nearly all individual households. They deal with economic easing, which aims to close the income gap in demand. It also deals with bank restructuring and income generation out of government debt. The writer has no illusion that such proposals are exhaustive. There may be many more good ideas, hence the term used in the title: “draft”. The paper hopes to be instrumental in setting off a discussion between all parties involved. Only if all parties..

2p hoangphiyeah1tv 18-04-2013 64 5   Download

The timing of monthly bill payments could explain the pattern we observe, if the timing happens to coincide with payday for most households. To the extent that the timing of bill payments is non-discretionary, this explanation implies that the decline in spending cannot be used to infer household preferences for timing of consumption.

76p bin_pham 06-02-2013 47 4   Download

Total outstanding adjustable-rate subprime mortgages are less than USD 1 trillion. Moreover, those mortgages originated during 2006 and early 2007 represent only a fraction of that total. Thus, even if subprime delinquency rates keep climbing to unprecedented levels, it seems likely that total losses will be roughly in a range of USD 100-200 billion. Although this is a lot of money, it pales next to the USD 58 trillion of net worth of US households or the USD 16 trillion market capitalization of the US equity market.

7p doipassword 01-02-2013 45 3   Download

Targeting households and firms: influencing location choices. The demand side of balanced urban development involves measures to influence where households and firms choose to locate in an urban area. Although they are not yet well established, particularly in the developing countries, policies to influence location choices have led to some interesting experiments, including a “reverse” zoning scheme in the Netherlands (the “ABC” policy) and a mortgage instrument based on “location efficiency” in the United States.

27p saimatkhauroi 01-02-2013 46 3   Download

This interest rate configuration also has implications for households deciding on the maturity of their mortgage financing. When short-term rates are low and deemed unlikely to rise, households shorten the maturity of their borrowing, often counting on being able to switch to long-term mortgages when they feel interest rates may rise. As households switch, banks dependent on short-term funding have to hedge their new interest rate exposures.

36p taisaovanchuavo 23-01-2013 63 5   Download

Australian banks’ conservative lending practices, together with robust supervision by APRA and the Australian economy’s strong performance since the global crisis, have contributed to a low nonperforming loan ratio compared to other advanced countries (Figures 3 and 4). 5 Despite banks’ high exposure to residential mortgages (56 percent of total loans at end-2010), exposure to high-risk mortgages is small, as less than 10 percent of owner-occupiers had mortgages with loan-to-value ratios higher than 80 percent and debt service ratios greater than 30 percent.

22p machuavo 19-01-2013 75 2   Download

Banks’ main vulnerabilities are their exposure to highly indebted households through residential mortgage lending, together with their sizable short-term offshore borrowing. Household debt is high at about 150 percent of disposable income but is held mainly by higher income households. Moreover, exposure to high-risk mortgages is small.

8p machuavo 19-01-2013 39 3   Download

Another key feature of migrant remittances is that the flows of money sent are not necessarily related to the level of development in the receiving country. They are rather related to: (a) the market for foreign labour; (b) the receiving country’s regional economic position and their relationship to a more economically salient country; (c) the macroeconomic impact that remittances have on the receiving country; (d) the distributive effect on those remittance recipient households.

81p enterroi 02-02-2013 44 3   Download

The recent financial crisis exposed a number of weaknesses in the housing finance sector in the United States (U.S.). The resulting problems can be sourced to incentives guiding decisions in the funding and loan management chains, to incentives driving households’ repayment and default decisions under the personal bankruptcy framework, and to incentives for loan servicers and investors to choose foreclosure over loan modification.

31p enter1cai 16-01-2013 63 3   Download

Knowledgeable consumers who make informed choices are essential to an effective and efficient marketplace. In classical economics, informed consumers provide the checks and balances that keep unscrupulous sellers out of the market.

14p songngoc 12-03-2009 190 30   Download