5, 10, or 15: Maturity Choice of Private Mortgage Borrowers
38 Pages Posted: 31 Jan 2013
Date Written: January 29, 2013
This paper analyzes the factors that influence the maturity choice of private mortgage borrowers. Using a unique dataset from the German market with more than 40,000 mortgages we find a significant influence of pricing variables, especially of the relative pricing of a mortgage provider compared to the market average. In addition, we show that personal factors matter suggesting that risk averse borrowers and borrowers who suffer most from interest rate increases choose longer maturities. Finally, we show that mortgage brokers' advice is significantly influenced by their commission scheme.
Keywords: Household Finance, Mortgage Choice, Fixed Rate Mortgage, Adjustable Rate Mortgage
JEL Classification: D14, E40, G21, R20
Suggested Citation: Suggested Citation