Why Do European Home Owners Experience Loan Repayment Difficulties? Some Preliminary Results of Combining Macro and Micro Approaches

In recent decades, more and more European households have become home owners. Typically, this has been achieved with the help of a loan, repaid over a number of years to cover a proportion of the purchase price. Some households in some countries and at some times experience financial hardship in repaying the loan, which may lead to mortgage default and eventually repossession. Understanding why some individuals experience financial difficulties, and why that may be translated into housing loan difficulties, non-payment and then the loss of the home, has significance in both scientific and policy terms. The present paper reports preliminary results from ongoing work that aims to combine two approaches to the study of loan repayment difficulties. Reporting first on results from a study using macro data that identifies the importance of national institutional arrangements such as labour and financial markets, these are used second to inform analysis using micro data obtained from the European Community Household Panel survey.