Template-type: ReDIF-Paper 1.0
Author-Name: Dr. Petra Gerlach
Author-Name-First: Petra
Author-Name-Last: Gerlach
Author-Person: pge202
Author-Name: Seán Lyons
Author-Name-First: Seán
Author-Name-Last: Lyons
Author-Person: ply16
Title: Mortgage arrears in Europe: The impact of monetary and macroprudential policies
Abstract: Mortgage arrears arise if a household faces affordability problems and/or is in negative equity. Because widespread arrears pose a risk to the stability of banks and limit households' future access to credit, a crucial question is how monetary or macroprudential policies influence their incidence. We use a European household data set to analyse what drives arrears and find that affordability problems, such as unemployment, low income and high mortgage payments, matter, which suggests that monetary policy has an impact. Households facing the dual trigger of affordability problems and negative equity are more likely to go into longer-term arrears; macroprudential regulation preventing high loan-to-value (LTV) ratios can thus also have an impact.
Length: 32 pages
Creation-Date: 2015
Contact-Email: forschung@snb.ch
File-URL: https://www.snb.ch/en/publications/research/working-papers/2015/working_paper_2015_05
File-Format: text/html
Number: 2015-05
Classification-JEL: D14, E58, G28
Keywords: Arrears, negative equity, monetary policy, loan-to-value ratios
Handle: RePEc:snb:snbwpa:2015-05