TY - JOUR
T1 - Disentangling the effects of household financial constraints and risk profile on mortgage rates
AU - Carbo-Valverde, Santiago
AU - Mayordomo, Sergio
AU - Rodríguez-Fernández, Francisco
N1 - The final publication is available at Springer via http://dx.doi.org/[insert DOI]
PY - 2018/1
Y1 - 2018/1
N2 - In this paper we disentangle the impact of household financial constraints on mortgage rate from a number of dimensions of credit risk. This analysis relies on a dataset that contains information on the economic and financial decisions of Spanish households in four different years: 2002, 2005, 2008, and 2011. Our results suggest that banks’ profitable customers are able to bargain for lower mortgage rates. However, contrary to other studies, the risk profile does not have a significant effect on mortgage rates. Credit institutions tend to charge higher rates during the crisis to all customers, irrespective of their risk profiles.
AB - In this paper we disentangle the impact of household financial constraints on mortgage rate from a number of dimensions of credit risk. This analysis relies on a dataset that contains information on the economic and financial decisions of Spanish households in four different years: 2002, 2005, 2008, and 2011. Our results suggest that banks’ profitable customers are able to bargain for lower mortgage rates. However, contrary to other studies, the risk profile does not have a significant effect on mortgage rates. Credit institutions tend to charge higher rates during the crisis to all customers, irrespective of their risk profiles.
KW - Households
KW - Mortgages
KW - Financial constraints
KW - Credit risk
U2 - 10.1007/s11146-016-9595-7
DO - 10.1007/s11146-016-9595-7
M3 - Article
SN - 0895-5638
VL - 56
SP - 76
EP - 100
JO - The Journal of Real Estate Finance and Economics
JF - The Journal of Real Estate Finance and Economics
IS - 1
ER -