Study On Determinants Of Personal Residential Mortgage Default

Once Lehman Brothers and other American financial companies are collapsed or encountered a great deal of loss,triggering a global finical crisis.Banks and lending companies have been realized that the credit risk management system of personal mortgage is very important.Strengthening credit risk management and preventing mortgage loan defaults have become a serious problem facing the global financial industry.Some developed countries’ banks and financial institutions took the lead in improving credit risk management,hoping to actively expand their personal credit business while reducing the default rate.As the neighbour and top trading partners of the United States,Canada did not show a series of imbalances in the financial crisis before the subprime financial crisis,but continued to operate well in the financial crisis.In addition to a very strict financial regulatory system,a government-guaranteed personal housing loan system,and a well-established personal credit assessment system.Canadian banks pay great attention to study of default risks and have strict control over borrower ‘s credit risk,especially borrower’s characteristics and consumer behavior,as well as property and interest rate trends.Although it is impossible to prevent borrowers from defaulting,effective credit risk management and default rate predictions can help reduce revenue losses.The goal of this study is that through the theoretical analysis of the whole thesis,my many years work experience in Canadian banks and the application of the Logistics model to the empirical analysis of the relationship between default factor and default,we can find that the determinants of the personal mortgage default including borrower characteristics(age,occupation,household income,education background,industry expectations,debt serviceability,etc.),mortgage characteristics(interest rate,contract terms of interest,loan-to-value ratio,etc.);and property characteristics(house price,location,etc.).Finally,it summarizes the advantages and disadvantages of Canadian banks on the risk management of mortgage default,and provides a reference for the risk management of personal housing mortgage loans in China.