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Disentangling the Effects of Household Financial Constraints and Risk Profile on Mortgage Rates

Santiago Carbó-Valverde (), Sergio Mayordomo () and Francisco Rodríguez-Fernández ()
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Santiago Carbó-Valverde: Bangor Business School, CUNEF and Funcas
Francisco Rodríguez-Fernández: University of Granada and Funcas

Authors registered in the RePEc Author Service: Santiago Carbo Valverde ()

The Journal of Real Estate Finance and Economics, 2018, vol. 56, issue 1, No 3, 76-100

Abstract: Abstract 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.

Keywords: Households; Mortgages; Financial constraints; Credit risk (search for similar items in EconPapers)
JEL-codes: G21 R21 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1007/s11146-016-9595-7

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