Rising interest rates increase housing loan defaults by 5%: study
The article examines how changes in interest rates affect the likelihood of people defaulting on their housing loans. By analyzing data from French housing loans between 2004-2015, the researchers found that a 100 basis point increase in quarterly payments due to interest rate changes led to a 5% increase in the probability of default. They also discovered that having stable employment can help protect against default when interest rates rise. Additionally, riskier borrowers tend to choose adjustable-rate loans, which can be risky when interest rates are uncertain.