scholarly journals Economic Mechanism and Cash Flows Modeling for Reverse Mortgage

2018 ◽  
Vol 22 (6) ◽  
pp. 106-120
Author(s):  
E. V. Kuz’mina ◽  
A. A. Yanin
Keyword(s):  
Real Estate ◽  
Senior Citizens ◽  
Market Equilibrium ◽  
Cash Flows ◽  
Mortgage Lending ◽  
Mortgage Market ◽  
Reverse Mortgage ◽  
Economic Mechanism ◽  
Expected Benefits ◽  
The Uk

The research is devoted to the economic mechanism of reverse mortgage —  a credit product aimed at improving the standard of living of senior citizens, owners of real estate. The idea of the reverse mortgage has been given, as well as the mechanisms of use of real estate owned by senior citizens in order to provide them with additional income. The examples of reverse mortgage in the uS, the uK, Spain and Australia have been given. The authors have also described the methods of reverse mortgage lending in Russia. Based on the analysis of international experience, the economic expediency of investing in this credit tool has been assessed. Considering consumer demand factor, it is possible to calculate the equilibrium rate and, therefore, to find the coordinates of the market equilibrium point. The authors have developed a mathematical model of reverse mortgage for the case of lifetime annuity payments. This model allows to calculate the expected benefits of borrowers and lenders. There have been done (and implemented) two notes that significantly distinguish reverse mortgage modeling from other loan products: 1) a lifetime reverse mortgage does not have a fixed expiration date; 2) when taking a loan of this type, borrowers consider not only consumption, but also accumulation of inheritance. The model allows to calculate the position of break-even points and market equilibrium (relative to the interest rate). This will help economically interested agents to assess the potential of the reverse mortgage market in Russia.

‘We All Live in a Robbie Fowler House’: The Geographies of the Buy to Let Market in the UK

2009 ◽  
Vol 11 (3) ◽  
pp. 438-460 ◽  
Author(s):  
Andrew Leyshon ◽  
Shaun French
Keyword(s):  
Private Sector ◽  
Financial Institutions ◽  
Mortgage Lending ◽  
Mortgage Market ◽  
Capital Gains ◽  
Financial Security ◽  
Financial Responsibility ◽  
Income Stream ◽  
The Uk

The buy to let market, produced through the re-regulation of the private rented market in the late 1980s and the promotion of a new mortgage product by the Association of Residential Letting Agents and private sector lenders in the 1990s, accounted for 12 per cent of all UK mortgage lending by 2007. Buy to let is popularly understood as a vehicle for speculative investment and as a means for securing long-term financial security through capital gains via property, and it represents an important aspect of financialisation, helping to call forth new investor subjectivities, which promulgate individualised forms of financial responsibility. Buy to let was also a profitable income stream for financial institutions in the UK which outperformed the mainstream mortgage market until problems in this market became apparent. This article reports on research carried out on the buy to let market and draws attention to the highly geographical nature of the market, which has distinctive regional and urban geographies. These geographies help to explain the differing fortunes of the buy to let market.

scholarly journals Choice between Rent and Mortgage: Evaluating the Net Present Value of Home Ownership

2019 ◽  
Vol 11 (4) ◽  
pp. 7-18
Author(s):  
O. I. Ivanov ◽  
M. M.S. Naimi
Keyword(s):  
Real Estate ◽  
Net Present Value ◽  
Home Ownership ◽  
Housing Prices ◽  
Mortgage Lending ◽  
Mortgage Market ◽  
Model Parameters ◽  
Macroeconomic Conditions ◽  
Financial Variables ◽  
Mortgage Interest

The article considers the problem of choosing between the ownership of residential real estate and its rental as a solution to the investment problem. The purpose of the article is to formalize this task using only financial variables (without explicitly including non-monetary preferences) and testing it on real Russian data on real estate and mortgage lending markets. The results can be used: a) at the house-hold level, which usually poorly take into account the financial side of the decision; b) at the level of macroeconomic policy to predict the dynamics of the mortgage market. We identified the following key model parameters: the expected rate of growth in housing and rental prices, mortgage interest, and the planned period of real estate ownership. The model demonstrates that for an average of Moscow or Russian housing with enough period of ownership, the purchase is generally more profitable in the cur-rent macroeconomic conditions. However, if the forecast for the dynamics of changes in housing prices worsens, when the nominal price increase is 5-8% lower than the discount rate, the answer may change in favor of renting. This is especially true in connection with the negative dynamics of real prices in the Russian housing market.  

scholarly journals MORTGAGE LENDING MARKET IN THE RUSSIAN FEDERATION: CURRENT STATE, PROBLEMS AND PROSPECTS

2021 ◽  
Vol 2 (53) ◽  
pp. 72-78
Author(s):  
S.A. Starykh  ◽  
◽  
S.A. Lavoshnikova  ◽  
 A.D. Chesnokova ◽  
Keyword(s):  
Real Estate ◽  
Russian Federation ◽  
Real Estate Market ◽  
Mortgage Lending ◽  
Mortgage Market ◽  
The Real Estate ◽  
Financial Bubble ◽  
The Real Estate Market ◽  
The Russian Federation ◽  
The Impact

Subject. The market of mortgage housing lending in the Russian Federation. Topic. The impact of the coronavirus pandemic on the mortgage lending market. Purpose. Analyze the housing mortgage lending market in the Russian Federation and identify the reasons for its explosive growth in the 3rd and 4th quarters of 2020. Methodology. Methods of comparative analysis of the housing mortgage lending market in the Russian Federation. Results. The possibility of the formation of a financial bubble in the real estate market in Russia is studied, and the probable prospects for the development of the mortgage market are evaluated Application area. The mortgage lending market, including the behavior of borrowers (buyers in the housing market) and the activities of credit institutions. Conclusions. The article analyzes the housing mortgage lending market in the Russian Federation and identifies the reasons for its explosive growth in the 3rd and 4th quarters of 2020. The article examines the impact of the coronavirus pandemic on the mortgage lending market, including the behavior of borrowers (buyers in the housing market) and the activities of credit institutions. The possibility of the formation of a financial bubble in the real estate market in Russia is studied, and the probable prospects for the development of the mortgage market are evaluated. Keywords: mortgage lending, deferred demand, financial bubble, coronavirus pandemic, mortgage lending rate, key rate, average credit rating of the borrower, overdue debt, bankruptcy, reserves for possible losses.

scholarly journals Mortgage Loan: Assessment of the Current Situation and Impact on the Solution of Housing Problems

2020 ◽  
pp. 78-85
Author(s):  
Nelia Volkova ◽  
Kateryna Khamula
Keyword(s):  
Real Estate ◽  
Financial Market ◽  
Effective Means ◽  
Mortgage Lending ◽  
Mortgage Market ◽  
Mortgage Loan ◽  
Legal Provisions ◽  
Current State ◽  
Mortgage Credit ◽  
Practical Recommendations

The development of the mortgage market solves both the economic problems of activation and efficient use of financial resources, and social problems in attracting social groups to meet their needs through the mechanism of the financial market. This determines the pattern of development of ways to ensure and develop these processes in Ukraine, their theoretical justification, taking into account the peculiarities of the national economy and current global trends in the development of housing mortgage lending. The purpose of the work is to develop theoretical principles, guidelines and practical recommendations for improving the mortgage lending system in Ukraine. To achieve this goal, the following tasks were set: to summarize the theoretical provisions on the essence of mortgage lending; to analyze the current state of mortgage lending in Ukraine; identify conceptual approaches to enhancing the importance of mortgage credit in solving housing problems. The object of study is the process of assessing mortgage lending. The subject of the research is theoretical-methodical and practical aspects of mortgage lending in Ukraine and its impact on solving housing problems of the population. The paper summarizes the theoretical provisions on the essence of mortgage lending as an effective means of transforming capital tied to real estate; thanks to the analysis of the current state of mortgage lending in Ukraine it is proved that it is one of the most mobile segments of the financial market and today real estate lending has intensified and started to grow, but significant mortgage lending as before the crisis, unfortunately, has not yet been achieved; conceptual approaches to strengthening the importance of mortgage credit in solving housing problems, which are to improve the mortgage lending system in Ukraine. The information base of the study consisted of official materials of the National Bank of Ukraine, performance indicators of JSC "State Savings Bank of Ukraine", JSC CB "Globus", PJSC JSCB "Arcade", JSB "Ukrgasbank", materials of scientific conferences, Internet sources. The scientific novelty of this work is to substantiate the theoretical, legal provisions and provide practical recommendations for improving the mortgage lending system in Ukraine.

scholarly journals A Numerical Analysis to Study Whether the Early Termination of Reverse Mortgages is Rational

2019 ◽  
Vol 11 (23) ◽  
pp. 6820
Author(s):  
Hyung-Suk Choi
Keyword(s):  
Growth Rate ◽  
Numerical Solutions ◽  
House Price ◽  
Developed Countries ◽  
Cash Flows ◽  
Mortgage Market ◽  
Early Termination ◽  
Pricing Model ◽  
Reverse Mortgage ◽  
Mortality Improvement

A reverse mortgage supports the aging society more sustainably by providing stable cash flows to elderly retirees. Although the reverse mortgage market has successfully grown in many developed countries, we have observed significantly increased early terminations due to the recent housing market boom in Korea. In this study, we provide the numerical solutions for the monthly payment from the actuarial pricing model of the reverse mortgage, reflecting the house price growth and mortality improvement to examine whether the early-termination-and-repurchase strategy is profitable. Findings suggest that in order for the strategy to be profitable, the realized growth rate of the house price should be significantly greater than the expected growth rate in the actuarial pricing model. Furthermore, for the older borrower, the greater growth rate of the house price is required for the strategy to be profitable.

Years purchase revisited: quarterly in advance cash flows

2015 ◽  
Vol 33 (3) ◽  
pp. 291-298
Author(s):  
Michael Patrick
Keyword(s):  
Real Estate ◽  
Design Methodology ◽  
Cash Flows ◽  
Real Estate Market ◽  
Content Type ◽  
Compelling Reason ◽  
Market Practice ◽  
The Uk ◽  
Practical Implications

Purpose – The purpose of this paper is to explain the derivation of the years purchase (YP) quarterly in advance formula. Design/methodology/approach – This education briefing is an overview of the YP quarterly in advance formula in the context of the UK real estate market. Findings – Whilst arithmetically more precise than market practice it lacks a compelling reason to be adopted in its place. Practical implications – Understand the effect on stated yields of using annually in arrears, rather than quarterly in advance, assumptions. Originality/value – This is a review of existing models.

scholarly journals Supply driven mortgage choice

Urban Studies ◽  
2016 ◽  
Vol 54 (5) ◽  
pp. 1194-1210
Author(s):  
Alla Koblyakova ◽  
Michael White
Keyword(s):  
Capital Requirements ◽  
Mortgage Lending ◽  
Mortgage Market ◽  
Policy Implications ◽  
Supply Side ◽  
Variable Rate ◽  
Mortgage Debt ◽  
Mortgage Choice ◽  
The Uk ◽  
Supply Side Factors

Variable mortgage contracts dominate the UK mortgage market. The dominance of the variable rate mortgage contracts has important consequences for the transmission mechanism of monetary policy decisions and systemic risks. This raises an obvious concern that a mortgage market such as that in the UK, where the major proportion of mortgage debt is either at a variable or fixed for less than two years rate, is vulnerable to alterations in the interest rate regime. Theoretically, mortgage choice is determined by demand and supply factors. So far, most of the existing literature has focused on the demand side perspective, and what is limited is consideration of supply side factors in empirical investigation on mortgage choice decisions. This paper uniquely explores whether supply side factors may partially explain observed/ex-post mortgage type decisions. Empirical results detect that lenders’ profit motives and mortgage funding/pricing issues may have assisted in preferences toward variable rate contracts. Securitisation is found to positively impact upon gross mortgage lending volumes while negatively impacting upon the share of variable lending flows. This shows that an increase in securitisation not only improves liquidity in the supply of mortgage funds, but also has the potential to shift mortgage choices toward fixed mortgage debt. The policy implications may involve a number of measures, including reconsideration of the capital requirements for the fixed, as opposed to the variable rate mortgage debt, growing securitisation and optimisation of the mortgage pricing policies.

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