Adjustable-rate mortgages lead to higher defaults during housing downturns.
The article presents a model that looks at why people default on their mortgages. It considers factors like income, house prices, inflation, and interest rates. The model shows that adjustable-rate mortgages led to more defaults during the U.S. housing crisis. It also found that different types of mortgages and loan-to-value ratios affect default rates. The study helps us understand how borrowers' choices impact mortgage defaults.