Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/213409
Title: UNDERSTANDING THE BEHAVIOUR OF HOME LOAN REFINANCING POPULATION TOWARDS INTEREST RATE CUTS
Authors: SEAH KIM SUAN
Issue Date: 2003
Citation: SEAH KIM SUAN (2003). UNDERSTANDING THE BEHAVIOUR OF HOME LOAN REFINANCING POPULATION TOWARDS INTEREST RATE CUTS. ScholarBank@NUS Repository.
Abstract: Understanding behavioral finance is essential for the marketing of financial products as it has been widely noted that people's behavior central to money decisions has contravened numerous economic rationality and efficiency model. The major purpose of this paper is to help banks to better understand their prospects and interpret the reasons and intentions behind individual refinancing action so that they can profit maximize from the liberalized CPF polices. From various analysis, the refinancing group in Singapore can be classified into 4 clusters and may be ranked in order of probability, from the least to greatest likelihood of refinancing: the mature owner-occupier, young owner-occupier, mature investor and young investor clusters. Banks can hence capitalize on this information by creating a niche market for the young investor cluster which is most susceptible to refinancing with a refinancing probability of 80.95%. Captivating terms that should be offered are further refined against the significant factors found in discriminant, logit and probit analysis. For this cluster, it is found that financial balance, years to maturity, interest rate and educational level are significant. Hence to entice this cluster, attractive terms like a lower interest rate or a package mortgage could very much lure them to refinance. These research results also help banks to preempt their existing customers in the young investor cluster from refinancing with another bank. The banks can react first by giving them a call qualifying their interest. If the resources permit, banks can also try to target all the segments by adopting different market positioning for the respective segments.
URI: https://scholarbank.nus.edu.sg/handle/10635/213409
Appears in Collections:Bachelor's Theses

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