Institutional approaches are key factor in mortgage defaults – BoE paper

Photo of mortgage lending

Differences between countries’ institutional frameworks may be a key factor in causing mortgage defaults, a working paper published by the Bank of England argues.

In Three triggers? Negative equity, income shocks and institutions as determinants of mortgage default, Andrew Linn and Ronan Lyons investigate the determinants of mortgage defaults, using data from five European countries from 1991 to 2013.

The ‘double trigger’ hypothesis is a relatively new theory of mortgage default. It states

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