The Effects of Conforming Loan Systems on Housing Finance Stability: A Panel Analysis of US, Japanese, and South Korean Mortgage Loan Systems — Oak Academic Publishing
Research ArticleOpen AccessGoogle Scholar indexed
The Effects of Conforming Loan Systems on Housing Finance Stability: A Panel Analysis of US, Japanese, and South Korean Mortgage Loan Systems
New York Branch Office, Korea Housing Finance Corporation, New York, NY, USA
,
Department of Business Administration and Accounting, Hartwick College, Oneonta, NY, USA
1 New York Branch Office, Korea Housing Finance Corporation, New York, NY, USA
2 Department of Business Administration and Accounting, Hartwick College, Oneonta, NY, USA
Amid growing concerns of a future housing crisis, this research addresses the factors that create stability within mortgage loan systems. Utilizing a review of extant literature, an econometric model is proposed for a panel analysis of three mature mortgage loan systems (those in Japan, South Korea, and the US) to determine factors that affect stability within each housing finance system. The results indicate that the prevalence of standardized fixed-rate mortgages with conservative loan-to-value and debt-to-income ratios inherently facilitates housing finance stability amid credit and interest rate dynamism. Larger derivatives markets for mortgages also bolster stability. Finally, recommendations are made for tightening policy gaps in South Korea’s housing finance system.
Agung, I. G. N. (2014). Panel Data Analysis using EViews. Wiley.
Bank for International Settlements (2017). OTC, Interest Rate Derivativ es, Basel . http://stats.bis.org/statx/srs/table/d7
Belsky, E. S., Herbert, C. E., & Molinsky, J. H. (2014). Homeownership Built to Last: Balancing Access, Affordability, and Risk after the Housing Crisis (pp. 372-394). Brookings Institution Press, Harvard University Joint Center for Housing Studies.
Cho, S. K. (2016). 20 Years’ Performance and Development Direction of the Korean Derivatives Market. In KRX Market Summer 2016 (Vol. 125). Korea Exchange. http://open.krx.co.kr/contents/OPN/04/04010000/OPN04010000.jsp#9dc17c437f6c35dfd11662eb0af72dbc=1&view=297
Claessens, M. S., Kose, M. A., & Terrones, M. M. (2008). What Happens during Recessions, Crunches, and Busts ? IMF Working Paper 08/274, International Monetary Fund. https://doi.org/10.5089/9781451871326.001
CoreLogic (2011). Reports Negative Equity Increase in Q4 2011. http://multivu.prnewswire.com/mnr/corelogic/50014/
Crowe, C., Dell’Ariccia, G., Igan, D., & Rabanal, P. (2013). How to Deal with Real Estate Booms: Lessons from Country Experiences. SSRN Electronic Journal . https://doi.org/10.2139/ssrn.1826544
Federal National Mortgage Association (FNMA) (2015). Annual Report . https://www.fanniemae.com/sites/g/files/koqyhd191/files/migrated-files/resources/file/ir/pdf/quarterly-annual-results/2015/10k_2015.pdf
Financial Services Commission (2017). Financial Business Plan Detail Briefing . Press Re-leases. https://fsc.go.kr/no010103/24634
Geanakoplos, J. (2010). The Leverage Cycle . Cowles Foundation Discussion Paper No. 1715R, Cowles Foundation for Research in Economics, Yale University.
Goodman, L., Ratcliffe, J., Parrott, J. et al. (2022). Housing Finance at a Glance : A Monthly Chartbook . https://www.urban.org/research/publication/housing-finance-glance-monthly-chartbook-january-2022
Hur, S. G. (2010). Mortgage Loans Viewed from the Perspective of Financial Stability. The Korean Economic Forum, 3, 5-29.
Hur, S. G. (2012). The Effects of DTI, LTV and Contract Types on the Delinquency of Loans Secured by Residential Property. Korea Society for Regulatory Studies , 21, 39-77.
Japan Housing Finance Agency (2015). Disclosure Booklet . https://www.jhf.go.jp/english/disclosure2015.html
Jeong, J. H. (2010). Understanding and Implications of Japanese Mortgage Loan and Securitization Market. In Housing Finance Monthly November 2010 (pp. 20-41). Korea Housing Finance Corporation. https://researcher.hf.go.kr/researcher/sub04/sub01.do?mode=view&articleNo=2251&srSearchReportMonth=11&srSearchReportYear=2010&article.offset=0&articleLimit=10
Kang, K. H., & Park, C. G. (2013). Conforming Mortgage Loans: Some Issues and Policy Recommendations. Asian Review of Financial Research , 26 , 153-182.
Kim, D. G. (2007). A Study on the Development of Mortgage- Backed Securitization System: Compared with Securitization of Japanese Mortgage . Master’s Thesis, Yonsei University Graduate School of Business.
Kim, J.-M. (2018). Comparisons of Korea, US and Japan Conforming Loans, and Their Implications. The Journal of Next-Generation Humanities and Social Sciences, No. 14 , 103-124. https://doi.org/10.22538/jnghss.2018..14.103
Kim, Y. D. (2014). Analysis of the Impact Channel of Mortgage Regulations on Housing Prices. Journal of Money & Finance, 32, 1-35. https://doi.org/10.21023/jmf.32.4.1
Kim, Y. I. (2013). Assessing Korean Households’ Credit Risk: Stress Tests with Household Level Data. Economic Analysis , 19, 59-95.
Lea, M. (2010). International Comparison of Mortgage Product Offerings (pp. 2-60). Research Institute for Housing America, Mortgage Bankers Association.
Lee, S. S. (2017). The Impact of LTV and DTI Changes on Household Debt and Macroeconomic Effects. KERI Insight , 17, 1-19.
Ministry of Land, Infrastructure, Transport and Tourism in Japan (MLIT) (2010). Market- Focused Measu res in the Housing Sector , Results of 2009 Policy Evalua tion ( Evaluation Report ) . https://www.mlit.go.jp/common/000111047.pdf
Nurrahmah, I., Wijaya, R. P., Hakim, S. R., Yahya, Y., & Nooraeni, R. (2020). Determinant Analysis of Open Unemployment Level in Banten Province, 2018 Using Panel Data Regression. Business Economic, Communication, and Social Sciences (BECOSS) Journal, 2, 191-201. https://doi.org/10.21512/becossjournal.v2i2.6332
Reinhart, C. M., & Rogoff, K. S. (2009). This Time Is Different: Eight Centuries of Financial Folly . Princeton University Press.
Warnock, V. C., & Warnock, F. E. (2008). Markets and Housing Finance. Journal of Housing Economics, 17, 239-251. https://doi.org/10.1016/j.jhe.2008.03.001
Wiedemer, J. (2010). Real Estate Finance (8th Ed.). South-Western Educational Pub.