Repayment risk and European home owners: the interplay of housing markets, labour markets, financial markets and social security systems

Abstract

Across Europe mass home ownership has been based on financial arrangements that have provided individual buyers with loans that can be repaid over long periods of time. These arrangements vary in their detail, and their integrity is subject to the risk of default. This paper focuses on the probability of households in different European countries experiencing repayment difficulties, and seeks to identify some of the macro factors that lead to this happening. It shows that national levels of repayment risk can be attributed to the nature of labour markets, social security systems, housing markets and financial markets.

Keywords:

• mortgage arrears
• convergence
• deregulation