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Mortgage product choice in Australia: The impact of market stress


Yanotti, M and Dungey, M, Mortgage product choice in Australia: The impact of market stress, JASSA, (4) pp. 44-52. ISSN 0313-5934 (2014) [Refereed Article]

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This paper presents evidence on the impact of the global financial crisis on the selection of mortgage products by borrowers. Using a sample of bank-originated mortgage applications between January 2003 and May 2009, we show that the advent of the crisis results in significant changes in the effects of a number of borrower characteristics on mortgage product choice. These changes are consistent with the hypothesis that risks are transferred to the borrower at a discounted price during the crisis period. ‘Honeymoon’ products became increasingly popular and more accessible during the crisis, offering the applicant higher discounts on the variable interest rate. Also, variable and fixed-rate mortgages are both taken up by relatively low-risk applicants. An earlier version of this paper was presented to the 2014 Australian Centre for Financial Studies’ Melbourne Money and Finance Conference.

Item Details

Item Type:Refereed Article
Research Division:Economics
Research Group:Applied economics
Research Field:Macroeconomics (incl. monetary and fiscal theory)
Objective Division:Economic Framework
Objective Group:Macroeconomics
Objective Field:Macroeconomics not elsewhere classified
UTAS Author:Yanotti, M (Dr Maria Yanotti)
UTAS Author:Dungey, M (Professor Mardi Dungey)
ID Code:100054
Year Published:2014
Deposited By:TSBE
Deposited On:2015-04-28
Last Modified:2018-11-13

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