Do household energy expenditures affect mortgage delinquency rates?

Robert Kaufmann, Nancy Gonzalez, Thomas A. Nickerson and Tyler S. Nesbit

Energy Economics, 2011, vol. 33, issue 2, 188-194

Abstract: We postulate a direct role for energy prices in the 2008 financial crisis. Rising energy prices constrain consumer budgets and thereby raise mortgage delinquency rates. This hypothesis is tested by estimating a quarterly cointegrating vector autoregressive (CVAR) model that seeks to quantify the factors that influence the percentage of US mortgages that are 30 to 89 days past due and those that enter foreclosure. Results identify a long-run relationship for the percentage of US mortgages that are 30 to 89 days past due that includes the interest rate on one-year adjustable mortgages, household expenditures on energy, nominal home prices, rates of home ownership, and the fraction of mortgages 90 days or more past due that enter foreclosure--unemployment rates have a short-run effect. Together, these variables account for much of the historical variation in the percentage of US mortgages that are 30 to 89 days past due and indicate that the post 2006 rise in this measure of mortgage delinquency is associated with falling home prices, an increase in household expenditures on energy, and rising unemployment.

Keywords: Mortgage; delinquency; rate; Foreclosure; Household; energy; expenditures; Financial; crisis (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0140-9883(10)00116-7
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:33:y:2011:i:2:p:188-194

Access Statistics for this article

Energy Economics is currently edited by R. S. J. Tol, Beng Ang, Lance Bachmeier, Perry Sadorsky, Ugur Soytas and J. P. Weyant

More articles in Energy Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().