An empirical analysis of default risk-rating on residential mortgages in China

With increasing of the proportion of residential mortgage loan balance in banks total assets, Residential mortgage default risk becomes the focus that researchers and financial managers pay more attention to day by day. This study applies a quantitative analysis for assessing the relative levels of default risk inherent in residential mortgages at origination. According to its risk similar characteristics in this paper, we divide borrowers into three default risk levels. The results of this research can provide effectively guidance for banks to control residential mortgage default risk at the beginning of lending in China.