5, 10, or 15: Maturity Choice of Private Mortgage Borrowers

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URL:	https://ub-madoc.bib.uni-mannheim.de/34217
URN:	urn:nbn:de:bsz:180-madoc-342172
Document Type:	Working paper
Year of publication:	2013
Place of publication:	Mannheim
Publication language:	English
Institution:	Business School > ABWL u. Finanzwirtschaft, insbes. Bankbetriebslehre (Weber 1993-2017)
Subject:	330 Economics
Classification:	JEL: D14 , E40 , G21 , R20,
Keywords (English):	Household Finance , Mortgage Choice , Fixed Rate Mortgage , Adjustable Rate Mortgage
Abstract:	This paper analyzes the factors that influence the maturity choice of private mortgage borrowers. Using a unique dataset from the German market with more than 40,000 mortgages we find a significant influence of pricing variables, especially of the relative pricing of a mortgage provider compared to the market average. In addition, we show that personal factors matter suggesting that risk averse borrowers and borrowers who suffer most from interest rate increases choose longer maturities. Finally, we show that mortgage brokers' advice is significantly influenced by their commission scheme.