文章基本信息

标题：Time Preferences, Mortgage Choice and Mortgage Default
本地全文：下载
作者：Sumit Agarwal ; Yongheng Deng ; Jia He 等
期刊名称：International Real Estate Review
印刷版ISSN：1029-6131
出版年度：2020
卷号：23
期号：2
页码：151-187
语种：English
出版社：Asian Real Estate Society, Global Chinese Real Estate Congress
摘要：The global economy is in the midst of a recession triggered by the ongoing pandemic of a novel coronavirus disease (COVID-19). The shutdown of the economy and a surge in the unemployment rate also cause stress to the US housing and mortgage system and create significant impacts on the default behaviour of mortgage borrowers. The potential rise in mortgage defaults may renew the long-standing debate over the empirical observation of why some mortgage borrowers do not default as “ruthlessly” as the finance theory predicts. In this paper, we propose an alternative theory to explain for the different default behaviours among mortgage borrowers. We hypothesize that the difference among time preferences across mortgage choices is one of the underlying factors that causes the heterogeneity in default patterns. Borrowers can either have a present-biased preference (overvaluing immediate outcomes), or a time-consistent preference (with standard exponential discounting). Borrowers with a present-biased preference are more likely to accept back-loaded mortgages that minimize up-front costs, even though this increases their risk of going “underwater” and entering default when an adverse shock, such as the one from the ongoing pandemic, occurs.
关键词：Mortgage Default;Mortgage Choice;Heterogeneity;Present-Biased Preference;Dynamic Inconsistency;Covid-19;Pandemic