Two Approaches to Examine the Impact of Different Credit Default Indicators of Real Estate Loans
“Scientific Problems of Engineering Economics of Construction and Real Estate Management, Regions and Territories Development (ICEREE’2019)” organized within 60th International Scientific Conference of Riga Technical University: Book of Abstracts 2019
Reimar Pfalz

Financing of real estates was a trigger of the biggest financial crisis after the “Great Depression” from the early thirties in the last century. One of the main causes of this 2007 started crisis was poor risk management in real estate financing. This paper examines the impact of different classes of indicators on credit default rates of real estate loans. Two research approaches should confirm a model that proves: how strong is the relationship between different predictor variables such as interest rates, macroeconomic and individual indicators on the response variable of credit defaults. The first approach is doing descriptive and inferential experimental research by collecting secondary data in different markets and by analyzing these data for correlations and for linear regressions. The second approach is a survey of different banks to compare and complement the results of the first research approach. The research gives the evidence that individual indicators and macroeconomic indicators have a higher impact on credit defaults than interest rates. The scientific research on this theme led to nearly the same result in different markets: the unemployment rate and thus personal conditions are the most responsible predictors for the credit defaults, also in different markets. The novelty of this work is the proof that a banking survey with primary data on the causes of credit defaults confirms and complements the results of the secondary data analysis.


Keywords
Credit Risk Management, Financing Private Residential Real Estates, Interest Rates, Mortgages, Credit Defaults, Securitization, Financial Crisis and Subprime Mortgage Crisis
Hyperlink
http://buni.rtu.lv/wp-content/uploads/sites/68/2019/09/ICEREE-2019-Abstracts.pdf

Pfalz, R. Two Approaches to Examine the Impact of Different Credit Default Indicators of Real Estate Loans. In: “Scientific Problems of Engineering Economics of Construction and Real Estate Management, Regions and Territories Development (ICEREE’2019)” organized within 60th International Scientific Conference of Riga Technical University: Book of Abstracts, Riga, 27-28 September, 2019. Riga: RTU Press, 2019, pp.31-32. ISBN 978-9934-22-369-3.

Publication language
English (en)
The Scientific Library of the Riga Technical University.
E-mail: uzzinas@rtu.lv; Phone: +371 28399196