Personal Housing Mortgage Loans Of Commercial Banks To The Risk Of Default Empirical Research

Since the commercialization of house was implemented in 1998, residential mortgage loan has become the major financing way by which Chinese people purchase a house and has been accepted by the residents. As the rapid development of real estate, the real estate financial business gets rapid development. By the end of the first season of 2009, the residential mortgage loan balance comes to 3.49 trillion Yuan, and increases 10.6% compared with the same period of the previous year. The balance increases more than 180 times during only 12 years, and the increase exceeds much more than the balances of other loans. As the size of residential mortgage loan balance increases rapidly, the default rate of residential mortgage begins to increase constantly too, potential risk has already appeared gradually. Meanwhile, default risks are becoming a serious concern in the industry. At present, empirical studies on default risk of residential mortgage are relatively few. Based on above-mentioned backgrounds, this paper takes the influencing factors of residential mortgage default risk as research springboard, attempts to identify the major influence factors. Then, evaluating models on default risk of residential mortgage are built in the paper.The sample data used is from a state-owned commercial bank in Changsha Hunan province by the time from the year 2004 to the March of 2009. To combine the related literatures and the practical state of sample data, this paper selects 19 variables such as:borrower's age, marital status, working years, education level, local or outlander, repayment per month, family income per month, overdue times, repayment per month/family income per month, loan amount and housing price index etc. from four dimensions. By applying Logistic model to make an empirical study on the sample data, the empirical results indicate that overdue times-housing price index, obligation ratio, lending rate, absolute financial obligation, education level and investment trait are important factors influencing the default risks. Meanwhile, the study finds that Logistic model have well predicting accuracy, as well as have practical meaning. The thesis also classified the rank of loan risk into three ranks:complete normal, overdue and substantive default, then evaluate the risk rating of residential mortgage loan by applying cumulative logistic model. This study results demonstrate that this model provides a certain level of guidance to commercial bank on the risk rating assessment of residential mortgage. Finally, based on empirical results, literature review and foreign experience, the thesis gives four strategies on how to perfect the management on default risk of residential mortgage loan.