Credit Risks Of Housing Mortgage Loan And Cause Analysis

With the rapid increase on economy and the improvement on urbanization and marketization, the house-purchase passion of towner is heating up continuously. Realty industry is becoming a mainstay industry of national economy. Meanwhile,loans extended to personal house purchase in China is also got a rapid development. By the end of 2010,the balance of loans extended to personal house purchase of financial institutions is reach to 6.16 trillion RMB, this procedure is also a proof of the improvement on commercial banks'risk management of loans extended to personal house purchase.Individual house loan is applied by people who want to use the house under his/her name as a guaranty to get a loan to purchase more houses. Individual house loan is originate from 19th century and got a further development on 20th century's America and Germany and other European countries. Currently, as the diploid gap among increasing house need,the price of real estate,and the annual income of family, it is almost impossible for most people to pay the whole house purchase fund one-off. People need to purchase the house by getting loan from bank and pay by the way of installment. At the present time individual house loan is become one of the most important and the most widely used housing financial tool globally. However, in China,individual house loan is emerge and develop as the reform on the regulation of land-use and the regulation of housing, it experienced the stage of establishment (1980-1990),the stage of rise(1990-1998), and the stage of all-round development. From 1985,which is the time of the first individual house loan be released, to 2010, individual house loan is becoming a main section of consumer credit service, and also one of important factors in impacting the stable development of national economy system.Because individual house loan service have advantages of dependable guarantee, high profit, and controllable risk, it turns into a indispensable part of commercial banks'profit. In recent years,the increase speed and structure ratio of the balance of home mortgage speak volumes for its importance and function on economy development of China. Meanwhile, because the real world is a imperfection information market, under the circumstance of information asymmetry, the behaviour between borrower and loaner turns into game playing, and thus moral hazard and adverse selection will be naturally caused. Under this situation, when borrower cannot or unwilling to act the contract, pay back the principal, or pay the interest on any accounts, banks'credit funds would suffer losses. Therefore, risk on individual housing loan appeared. The reasons for the appearance of individual housing loan is complicated and diversified, but the final outcome is show in the way of the violations of borrowers and the losses of banks.The personal housing loan in our country nowdays is in the stage of appearing gradually.Many loans have experienced for eight years since 1998. Many changes have taken place in the macro environment, the real estate market and the residents'income. For example,because of laid-off or the decrease in the income level of its own industry, the household income falls sharply, causing them to have no ability to continue to pay a mortgage loan; For another example, since 2004, the Chinese government has adopted some adjustment and control policies such as improving housing loan interest rate to control excessive prosperity of the real estate market,The increase in rates also can make someone who have already been close to pay limits not be able to pay a mortgage loan which forms breach. In recent years, the bad rate of personal housing loan in our country is on the ascendant trend, for example,in Shanghai,the personal housing loan defective rate in part of the state-owned commercial banks has exceeded 0.8%. On the other hand, due to the influence of subprime mortgage crisis in 2008, the world economy is still in recession. Reviewing the total process of the crisis, you may surprisely find that the present development status of personal housing mortgages in our country has many similarities with the American economy,.Both of them face the pressure of high inflation rate, the high growth market bubble and the macro environment of continuous raising interest rates. As the commercial Banks with a business of personal housing mortgage loan, without doubt, are facing more and more large systemic risk. In time of peace preparing for what shall be avoided, Chinese commercial Banks may be prepared to cope with the high-risk from real estate industry early, especially the default risk from the individual housing mortgage market.Meanwhile,the researches on individual housing mortgage loans and its risk management have never stopped in domestic as well as in foreigns.Generally speaking,researches and managements in foreign countries are more mature and advanced. The study of individual housing mortgage loans can be traced back to the 1830s.Because it has been a long time since the individual housing mortgage loans start and develop,the primary market of housing credit has been matured and the secondary market is going to be perfect. A large number of complete basis data has been formed,which provides strong data support to in-depth investigations and studies. In research fields,it is focused that mathematical models are builded, through the discussions and analysis of risk factors of personal housing mortgage loan, by application of options and other financial innovation theories in order to find the effective ways and methods to prevent and control the risk of individual housing mortgage loan,especially of managing credit risk. It can be said that the theoretical system on Individual Housing Mortgage loans has been built and business practices have a better application in foreigns. In China, with the reform of land tenure and residential housing system, the promotion of commercialization process and the formation of the housing mortgage market, the researches on risk management of individual Housing Mortgage loans have been developing gradually in academic and practice. However,the time of development on these researches is short and the development mechanism is also not perfect.The studies of Individual Housing Mortgage learn more from foreign advanced theories and practice of existing research results and then provide logical reasoning and qualitative analysis. Particularly,the empirical analysis in the credit default risk is far from richess.In 2008, the U.S. subprime mortgage crisis proved the traditional risk assessment and didn't play the warning role based on VaR, but how to accurate identification precipitate the influence factors of credit risk becomes very critical. So, commercial Banks on strengthening the individual housing mortgage credit risk management start from the main influence factors of advantage in order to achieve promoting risk management level. So, relevant commercial bank individual housing mortgage credit risk factors analysis at present seems have importantly.This paper mainly uses the method of empirical analysis research, in the study and summarization about personal housing mortgage credit risk, according to the study of the relevant factors analysis of the theory, using 21112 micro data of a commercial Banks in China a.mortgage of the to individual housing mortgage default rate (PD) to be explained variables, the sex, marital, education, family income, buy a house price and other relevant factors as regressors, through the logit model testing, trying to find the explanatory variables which affect the personal housing mortgage default rate (PD). this paper will try to make accord with current management and development of commercial Banks in China personal housing mortgage credit risk comments and Suggestions.