Housing Mortgage Loans Default Risk And Its Prevention Countermeasures

In recent years, our country’s economy develops rapidly, economic restructuring is becoming more rational, and the housing system has undergone great changes. With the increase of China’s urban and rural residents’ income, people have higher requirements for quality of life, but also pay more attention to housing. The residents’ purchasing willingness and ability have a great increase, so that our country’s housing finance industry has entered prosperity. The good development trend of housing mortgage loan business not only promotes the rapid development of the real estate market, also plays an important role in the healthy operation of macroeconomic. Now, the housing mortgage loan business develops rapidly and the loan amount is climbing, those meet the basic housing needs of the majority of residents, but also provide a more stable source of business and profits for the banks, promoting the healthy and harmonious development of the overall economy.Economic development led to the rapid growth in personal housing mortgage business. Though on the whole, China’s current housing mortgage loan’s requirements is relatively high in terms of loan value ratio and the risk is overall controllable, but with the rapid growth of loan data, the risk is also being gradually revealed, and has a growing trend. The main risk of banks is the default risk. At present, due to lack of appropriate risk control measures, the accumulated risk is bigger and bigger. Although the banks have started some work to predict the default risk, but the lack of data and great changes of the policy lead to hasty response.At present, the housing price of most of cities in China is generally too high, and the real estate bubble already exists. Although the bubble did not burst like the prediction, but the control policy in the housing is never stopped. Banks themselves facing multiple risk-free rate, liquidity, etc., so changes in the housing market for the banks which provides mortgage loans, turns out to be a great challenge. In the future, if the banks ignore changes in national macroeconomic policies, then it cannot regulate their own strategic decisions. With the accumulation of risk, the entire banking business will face great uncertainty, and ultimately will lead to operational difficulties.As a lender, the major security issues faced by the housing mortgage loan business must be given high priority, and strengthen research on effective risk control, to ensure the development sustained and healthy. Entire financial industry has realized the need to strengthen the management of default risk, and scholars have paid considerable attention to this issue. Currently there are a lot of researches on individual mortgage default risk by a variety of methods such as qualitative and quantitative, but the scholars cannot dock with the actual situation in our country.This dissertation introduces the theory of housing mortgage loan, and draws lessons from the research of western nations, taking the default risk of personal housing mortgage loan as the point of departure. This paper is divided into five chapters.The first chapter introduces the research background, summarizes the present research status and also leads to the main research direction of this article, through learning the domestic and foreign literature.The second chapter gives an overview of the theory of housing mortgage loan. It also introduces the successful management experience of the United States, Canada, and Japan in housing mortgage loan’s default risk.In the third chapter, the theoretical analysis of the default risk of housing mortgage loans is conducted. Based on the scientific definition of the default risk, we clear the default risk, and deepen the understanding of the housing mortgage loan’s risk, which lays a theoretical foundation for the model measurement in the next chapter.The fourth chapter studies the measurement methods of the housing mortgage loan’s default risk. Using the life table measures passive default and puts forward to the relevant conclusions. Adopted international popular KMV model, the distance of default and default probability of Chinese personal housing mortgage loans are measured. The result shows that Chinese individual housing mortgage default rates rise significantly.The fifth chapter is the key sections of this paper, which refers to the plight of our country in the housing mortgage loan business. Combined with the measurement results of the default risk, we put forward to the specific measurements of mitigating the risks, hoping to help enhance the default risk control ability of China’s commercial banks, and to promote rapid and healthy development of the whole economy.The main achievements of this paper are:(1) the economically developed areas have higher growth rates, as well as greater volatility, which reflect the degree of stability in house prices is even worse and their risk levels are higher. So as the lender, you should use different countermeasures to effectively guard against the default risk, according to different levels of economic development on their locations.(2) The economic crisis has led to significant price changes. After2008, the growth rate of China’s housing prices is lower, but the fluctuation rate is increasing, which indicates that there are many unfavorable factors in China’s real estate market. Therefore, in response to the default risk, we must take into account the impact brought about by regional differences and macroeconomic volatility.The novelty of this paper is:(1) in the measurement of the default risk, we considered the imbalance of China’s current economic development. According to the economic level, the cities are divided into different groups. And2008as a dividing line, we compared the loss degree of default risk under different economic levels.(2) The study on the risk factors of China’s housing mortgage loans of this paper, has not only taking relevant methods banks risk control, but making measures at the risk prevention on national levels. We hope to ensure the prosperity and sustainable development in the financial markets, thus safeguard the interests of the nation, enterprises and individuals.