published as 'Income volatility and residential mortgage delinquency across the EU' in: Journal of Housing Economics, 2005, 14 (3), 153-177
We investigate the socio-economic determinants of mortgage delinquency in 12 EU countries
and observe that income volatility significantly increases the mortgage delinquency risk. This
pattern even holds for borrowers with higher-income profiles if volatility in income is high
enough. From this result we can draw the following conclusions: i) mortgage protection
insurance policies might be failing to cover those borrowers most in need; ii) the existence of
credit market imperfections, and; iii) the inability for a number of borrowers most at income
risk to accumulate precautionary savings in order to meet mortgage payments when shocks
in income arise.
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