Endogeneity in household mortgage choice

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dc.contributor.authorDungey, M.
dc.contributor.authorDoko Tchatoka, F.
dc.contributor.authorYanotti, M.
dc.date.issued2018
dc.descriptionAvailable online 2 April 2018
dc.description.abstractWe show that failing to correct for both sample selection and endogeneity bias leads to an under-estimate of the importance of mortgage price in determining the mortgage product a household selects. With proprietary, loan-level data from a major Australian mortgage provider we study interest rate determination, loan size and mortgage product choice. The level of mortgage indebtedness varies with the value and characteristics of the property, while individual mortgage interest rates depend on borrower characteristics. Our results show that borrowers consider the initial interest rate and implicitly the loan amount they can access when choosing a mortgage product.
dc.description.statementofresponsibilityMardi Dungey, Firmin Doko Tchatoka, María B. Yanotti
dc.identifier.citationEconomic Modelling, 2018; 73:30-44
dc.identifier.doi10.1016/j.econmod.2018.03.001
dc.identifier.issn0264-9993
dc.identifier.issn1873-6122
dc.identifier.orcidDoko Tchatoka, F. [0000-0003-1876-0633]
dc.identifier.urihttp://hdl.handle.net/2440/113795
dc.language.isoen
dc.publisherElsevier BV
dc.relation.granthttp://purl.org/au-research/grants/arc/DP120100842
dc.rightsCrown Copyright © 2018 Published by Elsevier B.V. All rights reserved.
dc.source.urihttps://doi.org/10.1016/j.econmod.2018.03.001
dc.subjectMortgages; interest rate; selection bias; endogeneity; IV
dc.titleEndogeneity in household mortgage choice
dc.typeJournal article
pubs.publication-statusPublished

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