Impact of borrower's attributes on mortgage default: evidence from Nigerian lending market

Abstract

The need for proper identification of mortgage default factors has become a major focus of mortgage researches given the debilitating effect of default on mortgage market and real estate finance in particular. This paper therefore analyses the socio-economic attributes of borrowers as default triggers in residential mortgages of Primary Mortgage Institutions (PMIs) in Nigeria. Relevant data were collected on profiles of 305 borrowers randomly drawn from the credit databank of 36 PMIs. Using logistic regression (LR), payment-to-income ratio, type and sex of borrowers are found as significant mortgage default factors. With 68.2% overall prediction accuracy, LR is found appropriate for mortgage default prediction. However, the findings of this study also signal the complexity that is inherent employing socio-economic factors for default probability prediction.