Gestión Hipotecaria de las Familias Chilenas

Homes represent the largest asset for households, as well as the main debt in their balance sheets. A financially distressed family can use its home as collateral and smooth consumption, which would have a positive impact on macroeconomic stability. One of the most widely used mechanisms of tapping into the house collateral is the renegotiation of the mortgage loan terms, with a reduction of the interest rate or a lower payment made over a longer amortization period. Using the Household Finance Survey (EFH) of Chile (2007-11) we show that around 17% of the mortgage debtors have refinanced their loans at some point. Furthermore, the lowest income families increased their rate of renegotiation during 2008 to 2010, which is consistent with the use of this mechanism in periods of financial distress and high home prices.

Madeira C. (2013) Gestión Hipotecaria de las Familias Chilenas. Economía Chilena, 16, 122-133.