The growing difficulty of getting a mortgage

According to research data collected from the official Mortgage Bankers Association, the share of mortgage loans that were delinquent nearly around 90 days or more past due or in the process of foreclosure averaged 1.7% from 1979 to 2006, with a low of about 0.7% in 1979 and a high of about 2.4% lately in 2002. As of 2008, the share of seriously delinquent mortgages had surged to 5.2% . These delinquencies anticipated as a sharp rise in foreclosures estimated about 1.7 million which were started in the first three quarters of 2008, with an increase of 62 percent from the 1.1 million in the first three quarters of 2007.

The effect of social norms on the decision to have a mortgage and the amount of its payments is about one third and almost about 10x the size of the effect degree from college mortgage debt, respectively. There exists a persistence of culture among those with longer tenure in the host country holds few evidences as those who immigrated as children or young adults, and second-generation immigrants suggests that the vertical transmission of beliefs (from parents to children) is a plausible channel of transmission.

Innumerable researches have explained that the individual level have focused on the effects of inflation, tax treatment on mortgages, legal and economic institutions, bankruptcy exemptions, reposition periods, income, wealth, age, education, and household composition on the propensity to acquire a mortgage or the amount of mortgage debt borrowed. Households whose mortgage payments increase are more likely to change jobs and their new position is more likely to be in a different town than where they live. Higher interests rate will increase the probability that households receive additional income from income-bearing gigs. Cit is to be noted that the couples who file taxes jointly, makes a significant effect of spousal labor supply channel as households are more likely to become dual-earner household after their mortgage payment increases.

Due to the variation in mortgage payment is partially endogenous because of possible prepayment and refinancing, payment size with the reference rate level interacted with a measure of mortgage size. Conditions on individual’s age and previous year household income, the effect of interest rates on household income is not systematically related to mortgage size except through the size of the payment. The key threat to validity of this assumption is that mortgage holders may have incomes which are differently sensitive to macroeconomic fluctuations and merely happen to be higher in the years expecting high interest rates leading to higher consumption and savings for mortgage holders.

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