The Research On The Mortgage Loan Pricing System Of Commercial Banks Based On Risk Analysis

The amount and the proportion of mortgage loan have been developed fleetly since the housing reformation took place in 1998. More and more commercial banks have paid greater and greater attention to this operation, and the topic of mortgage loan has become one of the research hotspot. Considering the innovation of Chinese financial system and the opening extent of money market, the core of bank competition will be transferred from scope to risk pricing and finance innovation in the 21st century. With these changes, Chinese commercial banks need to improve theirs pricing ability of credit products. The aim of this paper is to develop a mortgage loan management system, which focuses on rational mortgage loan pricing. Hoping this research will be considered as one of the useful research explorations on the reconstruction of commercial banks'self-pricing system and the improvement of international competition capability.Firstly, this paper reviews briefly the theory of loan management, introduces the principle and the fundamentals of loan pricing, compares and evaluates four major loan pricing model used frequently by foreign commercial banks.Secondly, this paper analyses the concrete risk factor by integrating the character of mortgage loan. Grounded on the integration of the traditional pricing model, it put forward the mortgage loan pricing system based on risk evaluation which circles around the central effect factors. This system fixes on the floor and upper limits and benchmark interest rate. Its particular pricing procedure includes two major processes: (1)To confirm the initial interest rate by adjust the benchmark interest rate which take some elements such as the personal credit risk grade, loan category, loan term, the interrelationship between banks and borrowers, etc. as the basis; (2)To adjust the subsequently annual mortgage loan interest rate by using M-T-M model to confirm the alteration of value of the mortgage loan which related with the prepayment risk and term structure of interest rate in national debt market.Having achieved the methodology research, this paper makes use of the simulation data to verify the application of the pricing methodology recounted above, explains the calculation result at the same time. The conclusion summed up by this paper is that the maneuverability and the validity of the pricing model exist.