Research On Default Risk Of Individual Residential Mortgage In Our Country

Since the reform of the housing distribution system in 1998, Chinese residential mortgage market has experienced a leaped development. By the end of 2008, bank's loan balance of residential mortgage already had exceeded 298 trillion RMB in China. Individual residential mortgage of commercial banks has the characteristics of large amount,longer duration,lower risk of lagging behind and higher profits, and has been favored by various commercial banks. But as time goes by, the adverse consequences of the residential mortgage market's leaped development begin to show, and the residential mortgage default rate gradually increases. The default of residential mortgage not only affects the bank's expected revenue, but also brings the dynamic impacts to the whole macroeconomics through the financial accelerator, It has alarmed us when the crisis of American subprime mortgage burst in 2007. Therefore, on the basis of characteristics and the situation of Chinese residential mortgage market,it is necessary to identify the major influencing factors of individual residential mortgage's default risk and find the risk management model which match the conditions of our country, then we can provide a theoretical basis and countermeasures for commercial banks to prevent and control the default risk of individual residential mortgage.In this dissertation, I do the following research work: Firstly, I review the research that has been done at home and abroad for a long period in this area, and summarize the basic concepts and dominant theories of the residential mortgage default risk. Secondly, on the basis of a detailed analysis in characteristics and forms of risk in Chinese individual residential mortgage market, following causes of default risk are pointed out:on one hand, the asymmetric information between bank and borrowers is the internal cause of default risk; on the other hand, the cyclical nature of real estate industry and the bank's neglect of the risk are the external causes. Thirdly, on the basis of the corresponding data of one commercial bank of Chongqing, I set up an empirical model by Factor Analysis and Logistic Regression Analysis, then make the conclusion that the major causes of residential mortgage default risk are the borrower's financial burden ratio, the duration of the loans, the rate of loans, the delivery of real estate, the cyclical nature of real estate industry and the borrower's financial condition. Finally, according to earlier analysis and empirical findings, the commercial bank ought to adopt the following measures and recommendations for the risk management of individual residential mortgage:①. to strengthen the risk management awareness of residential mortgage;②.to strengthen information collection and verification of borrowers;③. to strengthen the tracking management of loan.