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Causes Of Non-Payment Of Mortgage Loans: Theoretical And Practical Aspects

Author

Listed:
  • Mitrašević, Mirela

    (Faculty of Business Economics, Bijeljina, University of East Sarajevo, Bosnia and Herzegovina)

  • Bardarova, Snezana

    (Faculty of Tourism and Business logistics, University “Goce Delcev” - Stip, Republic of North Macedonia.)

Abstract

Due to the significant share of mortgage loans in the portfolio structure of a large number of commercial banks, monitoring the ability of the household sector to repay debts is very important for financial stability. Since the accumulation of non-performing loans in banks' balance sheets is significantly affected by the fall in real estate prices, the paper will explain the factors that affect the cycles in the real estate market.The purpose of this paper is to show research that deals with the causes of non-performance of mortgage loans and the impact of lending standards on reducing systemic risk. In a period of crisis caused by various government measures to combat the COVID-19 pandemic, adequate lending standards are becoming even more important. Special attention in the paper is paid to the influence of LTV raids, the interest rate at which the loan was approved and the maturity of the loan on the probability of occurrence of default status. The paper provides a basis for further research that would include the extent to which the application of certain lending standards has contributed to the reduction of payment delays in the specific business conditions caused by the current pandemic.

Suggested Citation

  • Mitrašević, Mirela & Bardarova, Snezana, 2020. "Causes Of Non-Payment Of Mortgage Loans: Theoretical And Practical Aspects," UTMS Journal of Economics, University of Tourism and Management, Skopje, Macedonia, vol. 11(2), pages 138-150.
    • Handle: RePEc:ris:utmsje:0292
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    theory of default; housing market cycle; Lending Standards;
    All these keywords.

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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