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

VL - 56

SP - 76

EP - 100

JO - The Journal of Real Estate Finance and Economics

JF - The Journal of Real Estate Finance and Economics

SN - 0895-5638

IS - 1

ER -