The study aims to present implications for operation of a reasonable mortgage loans by deriving impact factors on mortgage loans and figuring out problems which may be occurred by changes in the housing rental market such as increase of mortgage loans, according to macroeconomic variables which are major impact factors on mortgage loans and the changes in housing rental market.
As the result of impulse response analysis for reaction of the mortgage loans, it was shown that mortgage loans react increasingly stronger to change in Consumer Price Index(CPI) as time difference becomes bigger. In other words, it appears that the changes in the consumer price index have more influence on mortgage loans as the time difference becomes bigger. In addition, the extent of reaction is so large that the consumer price index has been judged as a main impact factor on mortgage loans. In case of mortgage loans on changes in economic growth rate, its reaction width is slightly larger and it shows a larger increase as the time difference is bigger so it is possible to judge the economic growth rate as a main impact factor on mortgage loans. In case of mortgage loans on changes in interest rates, its reaction becomes stronger as the time difference is bigger so it shows more influence as the time difference increases. Thus, decline in interest rates is identified as a major factor of rising mortgage loans.
Meanwhile, it was indicated that changes in the key variables of rental housing market also affected mortgage loans. The mortgage loans slightly react to changes in Apartment Charter(Jeonse) Price Index and the reaction has been continuously maintained. Thus, they shows influence on mortgage loans. In addition, in case of mortgage loans on changes in Apartment Charter Price Index, the extent of its reaction becomes stronger as the time difference is bigger. In other words, it appears that the higher time difference is, the higher influence by changes in charter price ratio on mortgage loans is.
The analysis of variance decomposition also shows similar results to the previous impulse response analysis and the influence by its own factors on changes in mortgage loans is low during the whole period and the higher time difference is, the higher influence by variance of prediction errors.
It has been indicated that the impact factors on variation of mortgage loans are apartments charter price index, consumer price index, interest rates, economic growth rate and charter price ratio and among them, apartments charter price index has the highest influence on the variation of mortgage loans and the next impacts consist of consumer price index, interest rate, economic growth rate, charter price ratio in order.
This results are because Apartments carter price index increase cost of rental housing due to increase of Apartments carter price and the amount of mortgage loans have been increased by an increase in sales demand for housing due to the low interest rate. Also, charter price ratio is expected to affect mortgage loans because of steeper increase of charter price than increase of sale price. If the CPI increases, demand for housing increases by the function of the inflation hedge and it increases the amount of housing mortgage loans accordingly. In addition, it has been judged the increase in economic growth result from increase in housing transactions by meeting the self-possessive of housing and increase of absolute amount of mortgage loans.
Finally, because of low interest rates, potential demand of consumers with buying power of house is converted to effective demand based on the liquidity of finance and the amount of mortgage loans has been also increased. The results of this study present the following implications for stability in the mortgage market.
First, it has been expected that housing charter price continuously increases depending on price stability by balance of domestic housing supply and demand and it leads to increase of mortgage loans and household debt will be increased significantly accordingly. In other words, it is judged that the amount of mortgage loans has been also increased according to increase of housing demand by increase of charter price.
Thus, it is necessary to find a variety of ways to distribute the charter demand such as switch from the charter demand to monthly rent, enterprise private rental housing and happy housing. In particular, in order to expand housing rent market through decrease of the rent conversion rate, it is firstly necessary to increase supply of public rental housing and also necessary to consider the financial and tax support measures for tenants of the rent in the middle class.
Second, variation in consumer prices was found to affect mortgage loans by changing housing demand. Recently, the rate of rise of consumer prices is falling by the global recession and this trend will likely continue for the time being. However, if prices increases due to economic recovery, housing demand by hedge will increase and the amount of mortgage loans will significantly increase accordingly so it is necessary to observe the trend of consumer prices that may occur with future economic recovery.
Third, in the situation of having a severe problem of household debt due to the surge in household debt in the non-bank as well as bank, it is necessary to set a finer level of control of LTV(Loan-to-value ratio) and DTI(Debt-to-Income Ratio) in order to prevent insolvency of mortgage loans when interest rates increase or apartment price decrease.