@article{ART002970454},
author={Noh, Min-ji and Lee, Kyung Ae},
title={The Impact of Real Estate Price Drop and Interest Rate Fluctuation on Households’ Default Risk},
journal={Korea Real Estate Review},
issn={2092-5395},
year={2023},
volume={33},
number={2},
pages={7-24},
doi={10.35136/krer.33.2.1}
TY - JOUR
AU - Noh, Min-ji
AU - Lee, Kyung Ae
TI - The Impact of Real Estate Price Drop and Interest Rate Fluctuation on Households’ Default Risk
JO - Korea Real Estate Review
PY - 2023
VL - 33
IS - 2
PB - korea real estate research institute
SP - 7
EP - 24
SN - 2092-5395
AB - This paper examines the effect of real estate price decline and interest rate fluctuation on the default risk of mortgage-holding homeowners. Default risk is measured using cash flows and net asset holdings at the household level. First, using a stress test, we examine how these measures are affected by a variety of stress scenarios. The result shows that 0.14%–4.02% of households are at risk of default; therefore, the households’ default risk is not high. However, youth and middle-aged individuals are exposed to higher default risk than other age groups, and an estimated 56.5% of youth exposed to default risk belong to the middle-income class. Second, employing the probit model, we find that socio-demographic characteristics such as sex, age, and education variables are no longer significant independent variables for youth and middle-aged individuals compared with all other age groups. Furthermore, households with low financial assets, low net assets, multiple mortgages, and multiple properties have a higher default risk. Our results shed light on the necessity of monitoring youth and middle-aged individuals' financial health in order to lessen their social and economic impact.
KW - The Youth;Middle Class;Default Risk;Stress Test
DO - 10.35136/krer.33.2.1
ER -
Noh, Min-ji and Lee, Kyung Ae. (2023). The Impact of Real Estate Price Drop and Interest Rate Fluctuation on Households’ Default Risk. Korea Real Estate Review, 33(2), 7-24.
Noh, Min-ji and Lee, Kyung Ae. 2023, "The Impact of Real Estate Price Drop and Interest Rate Fluctuation on Households’ Default Risk", Korea Real Estate Review, vol.33, no.2 pp.7-24. Available from: doi:10.35136/krer.33.2.1
Noh, Min-ji, Lee, Kyung Ae "The Impact of Real Estate Price Drop and Interest Rate Fluctuation on Households’ Default Risk" Korea Real Estate Review 33.2 pp.7-24 (2023) : 7.
Noh, Min-ji, Lee, Kyung Ae. The Impact of Real Estate Price Drop and Interest Rate Fluctuation on Households’ Default Risk. 2023; 33(2), 7-24. Available from: doi:10.35136/krer.33.2.1
Noh, Min-ji and Lee, Kyung Ae. "The Impact of Real Estate Price Drop and Interest Rate Fluctuation on Households’ Default Risk" Korea Real Estate Review 33, no.2 (2023) : 7-24.doi: 10.35136/krer.33.2.1
Noh, Min-ji; Lee, Kyung Ae. The Impact of Real Estate Price Drop and Interest Rate Fluctuation on Households’ Default Risk. Korea Real Estate Review, 33(2), 7-24. doi: 10.35136/krer.33.2.1
Noh, Min-ji; Lee, Kyung Ae. The Impact of Real Estate Price Drop and Interest Rate Fluctuation on Households’ Default Risk. Korea Real Estate Review. 2023; 33(2) 7-24. doi: 10.35136/krer.33.2.1
Noh, Min-ji, Lee, Kyung Ae. The Impact of Real Estate Price Drop and Interest Rate Fluctuation on Households’ Default Risk. 2023; 33(2), 7-24. Available from: doi:10.35136/krer.33.2.1
Noh, Min-ji and Lee, Kyung Ae. "The Impact of Real Estate Price Drop and Interest Rate Fluctuation on Households’ Default Risk" Korea Real Estate Review 33, no.2 (2023) : 7-24.doi: 10.35136/krer.33.2.1
