Individual Housing Mortgage Default Risk Factors, Empirical Research

Since the housing reforms in 1998,the residential mortgage market has become a financial engine for the booming residential housing consumption development and great economic growth in china. With the rapid increase of residential mortgages in our country,we witness a high growth in the termination risks in it. Ill loan ratio in our country is obviously higher than that in the developed countries or regions such as United States and Hong Kong. So both academic and bank field pay more and more attention to the termination risks of residential mortgages.In this paper, some ideas were borrowed from the research results of western developed countries,meanwhile,theoretical analysis and empirical studies were made with the combination of the methods of qualitative and quantitative analysis. First, after combing the theories of default risks of residential mortgage, this paper made a systematic analysis for the main factors of the termination behaviour of our country's residential mortgage and conclude the general law of the relative borrowers by analyzing the live residential mortgage data of Chinese commercial banks.Secondly,the traditional Logistic regression model is employed to investigate factors influencing termination risks of residential mortgage. Empirical analysis are made and main risk factors are found.This paper manifests: One, the results of Logistic regression model indicates that borrower's age,education and marital status are crucial elements to mortgage termination and some elements of mortgage contract as loan term and loan-to-value ratio are also significant to mortgage termination,hence the model may be used as an effective tool for screening potential high risk borrowers in the loan origination processing.Two,adopting a risk-based pricing in residential mortgage in banks for different borrowers can enhance the availability to the most needed households to promote the development of real estate finance in China.