706 - Financial vulnerability of mortgage owners and mortgage lenders

Wetenschappelijke publicatie
Date 2 October 2002

From a macroeconomic point of view, Dutch households are in a basically sound financial position. Nevertheless, at a microeconomic level substantial financial risks may exist. This report presents a profile of the most vulnerable households with special attention to the mortgage debt/house value ratio and the mortgage debt/household income ratio. The affordability of housing costs for households with a mortgage is assessed in the case of an increase in mortgage interest rates, a decline in house prices and a rise in unemployment. The risk that banks and other mortgage lenders may suffer infection of their mortgage portfolios - i.e. that the proceeds from sale of the house are insufficient to repay the mortgage loan - is also discussed. Key words: financial vulnerability, payment problems for mortgagors, infection of mortgage portfolio JEL codes: D31, G21, R21, R31