Factors that affect mortgage default in Cyprus: Which are the borrower and mortgage characteristics and which are the macroeconomic factors that have a statistically significant effect on the mortgage default in Cyprus?

Abstract

This dissertation aims at identifying the determinant factors of mortgage default in Cyprus. It begins with a theoretical study of the factors that increase non-performing mortgage loans of the housing market globally. The study is expected to identify the characteristics of the mortgage loans which increase the probability for a household to default, creating non-performing loans in the portfolios of the Financial Institutions. Furtermore, the study is expected to identify which macroeconomic factors could lead to the increase of mortgage default in Cyprus. For this investigation data from a Cyprus Public Bank were collected which include default and non-default mortgage loans for the period from 2006 to 2013. The non performing mortgage loans problem noted a rapid increase in the last years in Cyprus and aggravates the financial position of the country. The issue of mortgage default attracted the interest of many scholars. Over the past years economists have put a lot of effort into understanding the causes of the increase of mortgage default.