Mortgage Termination Risk: A Review of the Recent Literature

Abstract

This paper presents a review and synthesis of the past fifteen years of research on mortgage termination risk. Understanding termination risk is fundamental to explaining the workings of the now $13 trillion mortgage market. The review covers theoretical, empirical, and methodological work, including both residential and commercial market segments. In addition to synthesizing existing findings, open questions for further research are identified. The overall objective is to introduce this important topic to journal readers who may not be actively involved in the mortgage field and to stimulate thinking about open issues that deserve additional research.