The Impact of the 2001 Financial Crisis and the Economic Policy Responses on the Argentine Mortgage Market

Abstract:     
Following the 2001 financial crisis, the government of Argentina instituted economic policies to soften the adverse impact of the crisis on the economy. In this paper, we use loan-level data to empirically assess the impact of the currency devaluation and the economic response policies on subsequent indexation of the mortgage rates on prepayment and default patterns of residential mortgages in Argentina. On the one hand, our results reveal a significant higher prepayment rate of borrowers who are relatively wealthy or have a US$-denominated mortgage. On the other hand, we observe a significantly higher default rate of borrowers who are less wealthy or have Peso-denominated mortgage.

Keywords: Argentine mortgage market, prepayment and default, financial crisis

JEL Classification: C41, F31, G21, R20

Accepted Paper Series