A Study On The Factors Affecting The Default Risk Of Housing Mortgage Loan

Since China Construction Bank firsl issued residential mortgage loans in1992,residential mortgage loans offered by commercial banks have become the mostimportant financing method for people who what to purchase houses. Right now;residential motrgage loans have been increasing rapidly at a speed of30%to40%annually. Although residential mortgage loans are less riskier than corporateloans, the term of residential mortgage loans is relalivt’ly longer, so does thetime of risk exposing. According to international standard, it is very dangerousfor citizcns to use1/3of their monthly income on house consumption. Butstatistics suggest that most of Chinese people have exceeded the internationalstandard and have been overwhelmed. As market cconomy deepens and industrystructure shitfs, unemployment increase and income expectation lfuctuation areinevitable. The potential default plienomcnon during the prolonged term of theloans has raised concerns among banking industry insiders. While academicshave nut done enough research on residential mortgage loan defaults, with mostof the research focusing on primary market and loan factors. The subprimemortgage crisis sweeping worldwide ifnancial market since early2007hasdemonstrated the importance of economic factors in crisis transmission. Thus,we decide to shift the research area from primary market to secondary market(MBS), and from loan perspective to economic perspective.In light of this, we will base our research on Jian Yuan2005-1, the first MBSproduct in China issued by China Construction Bank, mainly focus on factorsinfluencing MBS default risks, try to identity the main I’actors alTectingmortgage loan default risks in order to oiler policy guidance Ibr commercialbanks concerning the prevention of mortgage loan default risks.