Effect of Loan Value and Collateral on Value of Mortgage Default

Abstract

This study explore the factors influencingmortgage loan default by using the data of mortgagedefault case from Jammu and Kashmir Bank. Toachieve the study objectives sixteen variables are taken.The variables are categorized into three dimensions asborrower’s profile, loan value contents and collateralsecurity. The tools used for analysis of data describingmortgage loan defaulter’s are chi-square, regression,ANOVA, and logistic regression through SPSS 18.0.The results indicate that the borrower’s gender,borrower’s age, borrower’s marital status, theborrower’s income, loan rate, loan type, loan amount,amount repaid, LTV, LTI, form of collateral security,Value of collateral security, purpose of loan andsecondary finance on collateral security are significantlypositively correlated with the defaulter’s outstandingloan amount. While as education qualification ofborrower is significantly negatively correlated withdefaulter’s outstanding loan amount. Logisticregression results indicate that income, secondaryfinance on collateral security and interest rate aremainly responsible for mortgage default.