Please use this identifier to cite or link to this item: https://scholarbank.nus.edu.sg/handle/10635/223173
Title: AN EXAMINATION OF THE RELATIONSHIP BETWEEN HOUSEHOLDS' DIVORCE RATES AND HOUSING DEBT
Authors: NEO ZHI HAO
Keywords: Real Estate
Lee Nai Jia
2011/2012 RE
Homeownership
Marital distress and divorce
Mortgage
Issue Date: 6-Jun-2012
Citation: NEO ZHI HAO (2012-06-06). AN EXAMINATION OF THE RELATIONSHIP BETWEEN HOUSEHOLDS' DIVORCE RATES AND HOUSING DEBT. ScholarBank@NUS Repository.
Abstract: This dissertation attempts to explain why divorce rates in the United States are high. Using data from the Panel Study of Income Dynamics (2003, 2005, 2007 and 2009); I have examined marital distress brought by mortgage-related factors on divorce. For this purpose, pooled probit and logit regression models for contemporary and lagged explanatory variables have been used to explain the likelihood of couples’ divorce. My contemporary results found that house value, outstanding mortgage loan and mortgage-loan-to-value ratio are important mortgage-related explanatory variables in determining likelihood of divorce coefficient. House value is negatively-related to likelihood of divorce and is highly significant in all models. This suggests homeownership reduces divorce rates. Outstanding mortgage loan is positive, highly significant at 5% and 10% level in all four models. Mortgage interest rate is also positively-related but is significant only at 10% level. While mortgage loan-to-value (LTV) ratio and debt service ratio indicate negative-relationships with likelihood of divorce. The coefficient for mortgage LTV is negatively-related and highly significant while debt-service ratio is significant only at 10% level. One possible explanation is that households who own more expensive homes because of several beneficial reasons such as having better commitment, good location, bigger house and better housing quality. Hence, those households have to incur larger mortgage loans. Likewise, those households who have larger mortgage loans for more expensive homes are likely to incur more mortgage payments as well. Except for latent mortgage interest rate, duration of remaining mortgage and debt service ratios two periods ago, the results of latent pool regression models show similar relationships and significance levels for latent outstanding loan balance, house value and mortgage LTV.
URI: https://scholarbank.nus.edu.sg/handle/10635/223173
Appears in Collections:Bachelor's Theses

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