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Default Mortgage Profile: A Micro Analysis Of The Portuguese Case

Author

Listed:
  • João Rebelo

    (Centre of Transdisciplinary of Development (CETRAD), Economics, Sociology and Management Department (DESG) of Trás-os-Montes e Alto Douro (UTAD))

  • José Vaz Caldas

    (Centre of Transdisciplinary of Development (CETRAD), Economics, Sociology and Management Department (DESG) of Trás-os-Montes e Alto Douro (UTAD ))

Abstract

The crisis in the mortgage credit market along with its repercussions in the financial system and in the real economy led us to question how credit institutions are able to analyze the issue of mortgage default. This paper aims to assess the influence of default on mortgage in Portugal as well as the variables related to defaulters’ social and economic features and their loan capacity. In order to do this, an ordered probit model is estimated using a dataset of Portuguese households. The econometric results of this model indicate that loan capacity related variables (number of banking loans, financial effort rate and the ratio between loan amount and guarantee or real estate value) influence the ranking default probability. Furthermore, regarding the social and economic variables, only the dummies, such as “marital status” and “place of residence”, and the quantitative ones, such as “family size” and “monthly income”, became relevant.

Suggested Citation

  • João Rebelo & José Vaz Caldas, 2010. "Default Mortgage Profile: A Micro Analysis Of The Portuguese Case," Portuguese Journal of Management Studies, ISEG, Universidade de Lisboa, vol. 0(1), pages 109-125.
    • Handle: RePEc:pjm:journl:v:xiv:y:2008:i:1:p:109-125
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    References listed on IDEAS

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    Cited by:

    1. Lei Shi & John Evans & Yifei Li, 2018. "A Systems Analysis of Drivers of Individual Bankruptcies," Economic Papers, The Economic Society of Australia, vol. 37(4), pages 390-398, December.

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    More about this item

    Keywords

    households; mortgage; default; management risk; ordered probit;
    All these keywords.

    JEL classification:

    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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