A Research On Pricing Residential Mortgage Loans Based On Option Theory

With the rapid development of the national economy, the real estate industry has developed rapidly, and it has become a very important factor to economic growth. However, with the rapid development of the real estate industry, it is inevitable that banks and other financial institutions will be over-concentrated in the real estate market, so any minor changes of the real estate market will affect the financial markets and it will also bring huge financial risks. To meet the housing requirements of residents, and to prevent the development of the potential financial risks in the real estate market, so our research to financial risks in the real estate is a very important thing. Residential mortgage loan is the most important financial instruments in the financial markets, and its risk is an important problem in the real estate market.The pricing theory of housing mortgage is an important component of the housing mortgage research. Lots of experts and scholars have put forward some models about housing mortgage.In this paper, the binominal tree model option pricing is introduced to do quantitative analysis to the mortgage insurance. On the basis of facts, a parameter 8 representing rent is added. Then, other parameters of model are reconstructed.At the first, we introduce the historical background of housing mortgage research status and development trends. Secondly, we talk about some basic knowledge and major pricing methods about options theory. Then in the case of considering housing rental rates and not considering housing rental rates respectively we use binominal tree and triple tree to carry on the fixed price to the American options. Then comparing these results with results which are not considering housing rental rates, we can draw more realistic conclusions. Finally, the prime task which does to this article has carried on the summary, and briefly introduced the article next tentative plan.