The Determinants of Mortgage Defaults in Australia – Evidence for the Double-trigger Hypothesis
Additional contact information
Michelle Bergmann: Reserve Bank of Australia
RBA Research Discussion Papers from Reserve Bank of Australia
I explore the determinants of mortgage defaults in Australia. Specifically, I use a novel two-stage hazard model to examine evidence for the 'double-trigger' hypothesis – that defaults require both an inability to repay the loan and the loan to be in negative equity. My results are broadly consistent with the double-trigger hypothesis. Ability-to-pay factors, such as regional unemployment rates and borrowers' repayment-to-income ratios, are found to be correlated with loans entering arrears. Transitions from arrears to foreclosure, on the other hand, are more closely linked to the extent of negative equity.
Keywords: mortgage; mortgage default; foreclosure; loan-level data (search for similar items in EconPapers)
JEL-codes: D11 D12 G21 G51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:rba:rbardp:rdp2020-03
Access Statistics for this paper
More papers in RBA Research Discussion Papers from Reserve Bank of Australia Contact information at EDIRC.
Bibliographic data for series maintained by Paula Drew ().