Mortgage Choice - The Danish Case

Mikkel Svenstrup ()
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Mikkel Svenstrup: Department of Finance, Aarhus School of Business, Postal: Fuglesangs Allé 4, 8210 Aarhus V, Denmark, http://www.asb.dk/EOK/FIN/STAFF/MSV_FORM.HTM

No 02-22, Finance Working Papers from University of Aarhus, Aarhus School of Business, Department of Business Studies

Abstract: In this paper we analyze the mortgage choice faced by Danish borrowers.

Based on an analysis of the most popular Danish mortgage products,

we argue that Adjustable-Rate Mortgages (ARM) with life time caps will

combine the most attractive features from straight ARMs and callable

Fixed-Rate Mortgages (FRM). Furthermore, we find the delivery option

embedded in Danish mortgages to be an important feature, which protects

households from the risk of insolvency by facilitating a closer match

between assets and liabilities in the household portfolio.

Keywords: Mortgage; Choice; Valuation; Delivery Option; Prepayment (search for similar items in EconPapers)
Pages: 25 pages
Date: 2002-05-09
New Economics Papers: this item is included in nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:hhb:aarfin:2002_022

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