Research On Adaptable Strategy Of Shared Appreciation Mortgage In China

House price in China has been rising for recent years, bringing inability problem to afford house payments in many cities.This phenomenon arouses a most heated debate which puzzles the whole society. One feasible solution could be to support the real estate financial market, which provides classic mortgage products. Considering the fact that China falls far behind in terms of mortgage innovation compared to developed countries, mortgage innovation related research is a necessity.This paper focuses on shared appreciation mortgage applied in western countries for many years and analyzes the factors that may have effect on it, which include real estate industry, house buyer, banking industry and macro-policies. Based on these, mortgage details are re-designed. Then intensity model is adapted to price this mortgage, which combines default risk, prepayment risk, house price risk and interest rate risk. Finally, this paper practices numerical analyses through Monte Carlo simulations to test mortgage details and refines them.The contributions of this paper are as follows. First, it introduces shared appreciation mortgage to China by reviewing related research. Second, it summarizes factors that may affect common mortgage and shared appreciation mortgage with Chinese statistic data. Third, this paper re-designs shared appreciation mortgage and develops its pricing model with empirical testing.Simulation results show that newly-designed shared appreciation mortgage can pleasantly fit Chinese market, with mortgage term and discount in reasonable areas. It can be estimated that shared appreciation mortgage can be practical in China.