Individual Housing Mortgage Default Risk Analysis And Prevention

With the rapid increase of commercial banks' residential mortgage in China, risks of residential mortgage begin to soar constantly. Among all the risks, break contract risk is the main risk which commercial banks are facing. Now, financial circles in China have generally realized the necessity and urgency of strengthening residential mortgage break contract risk management, and academia in China has also paid attention to it. However, there is lack of the combination of qualitative analysis and quantitative analysis for the break contract risk of residential mortgage. Thus, this thesis will study the break contract risk of residential mortgage, in order to find the efficient method of keep risks away according to the in-depth analysis of default risks.This thesis accomplished the following jobs: (1) On the basis of summing up former scholars' study, this thesis mainly analyzes the cause of prepayment risk and its effect on cash flow by using the combination of qualitative analysis and quantitative analysis. (2) Establishes the rational termination payment model and analyzes the relation between the variables in the model. (3) This thesis tries to find the proper way of keeping risks away, under the real situation of China. In this thesis, prepayment is defined in the scope of breaking contract risks, and the rational termination payment model is established. Both of them are the shining points of this thesis.The results of the study are: (1) Generally, the higher the prepayment rate is, the more the interest lost of the bank will be. (2) This thesis finds out the way to control the break contract risks by controlling the condition of variables in the model, according to the establishment of rational termination payment model and analyzing the relation between the variables in the model. (3) It points out that we should use modern risk management skills to transfer and detract break contract risks, also we should try to make use of the rational termination payment model to control the default risks.