Submitted in fulfilment of the requirements of the Masters of Technology degree in Cost and Management Accounting, Durban University of Technology, Durban, South Africa, 2015. / The National Credit Act No. 34 of 2005 (NCA) was introduced by the South African government mainly to bring about accessibility to credit markets, protect consumers from malpractices and market abuses by credit providers and reduce consumer over indebtedness. As a result, credit providers are compelled to apply stringent rules and regulations when assessing a credit consumer’s affordability prior to granting home loans. This study aims at investigating the impact of the NCA on the affordability of home loans within the Pinetown metropolitan area. The literature review presents an overall view of affordability of home loans in developed and emerging countries and also provides an in-depth explanation of factors that affect affordability of home loans in South Africa. The predominant factors, amongst others that hinder the housing market, are: an increase in house prices; elevated interest rates and household debt which include inflation, transportation cost and low wage increase. A mixed methods approach was utilized for the research, analyzing both quantitative and qualitative data. Respondents (home loan borrowers) completed a questionnaire by indicating if assessments were conducted in terms of their affordability prior to the approval of their home loan and their view on the impact that the NCA had on their home loan. The data suggested strongly that credit providers had conducted proper credit and affordability assessments prior to granting home loans and that most home loan borrowers’ level of debt had remained stable since acquiring their home loans as they continue to meet their debts. An overall analysis revealed that the application of the NCA had a positive impact on the affordability of home loans in the research area and that compliance with NCA, when granting credit, resulted in the reduction of reckless lending, a decline in the level of consumer indebtedness and a reduction in payment default.

published_or_final_version / Real Estate and Construction / Doctoral / Doctor of Philosophy

published_or_final_version / Real Estate and Construction / Master / Master of Science in Real Estate and Construction

published_or_final_version / Business Administration / Master / Master of Business Administration

published_or_final_version / Real Estate and Construction / Doctoral / Doctor of Philosophy

Thesis. 1975. Ph.D.--Massachusetts Institute of Technology. Dept. of Economics. / Vita. / Bibliography: leaves 337-347. / Ph.D.

Variable rate mortgages (VRMs) have been introduced into the mortgage market as a means of addressing the housing finance problems encountered over the past two decades. To learn more about the demand for VRMs, this study analyzes borrower choice behavior and its economic determinants. In order to estimate the probability of borrowers choosing VRMs rather than conventional fixed rate mortgages, discrete choice (logit) models are specified and validated for both cross-section and pooled time-series cross-section data samples. These samples contain mortgage application information for the years 1978 through 1981. They were drawn from the Loan Register Report of the California Department of Savings and Loan. The probability of choosing a VRM is estimated as a function of selected price components of the mortgage instrument, borrower characteristics, and economic expectations.

In the first chapter, I study the effects of innovations in information technology on the housing market. Specifically, I focus on the improved ability of lenders to assess the credit risk of home buyers, which has become possible with the emergence of automated underwriting systems in the United States in the mid-1990s. I develop a standard life-cycle model with incomplete markets and idiosyncratic income uncertainty. I explicitly model the housing tenure choice of the households: rent/purchase decision for renters and stay/sell/default decision for homeowners. Risk-free lenders offer mortgage contracts to prospective home buyers and the terms of these contracts depend on the observable characteristics of households. Households are born as either good credit risk types--having a high time discount factor--or bad types--having a low time discount factor. The type of the household is the only source of asymmetric information between households and lenders. I find that as lenders have better information about the type of households, the average down payment fraction decreases together with an increase in the average mortgage premium, the foreclosure rate, and the dispersions of mortgage interest rates and down payment fractions, which are consistent with the trends in the housing market in the last 15 years. From a welfare perspective, I find that better information, on average, makes households better off. In the second chapter, I focus on the labor market behavior of couples. Search theory routinely assumes that decisions about the acceptance/rejection of job offers (and, hence, about labor market movements between jobs or across employment states) are made by individuals acting in isolation. In reality, the vast majority of workers are somewhat tied to their partners--in couples and families--and decisions are made jointly. This chapter studies, from a theoretical viewpoint, the joint job-search and location problem of a household formed by a couple (e.g., husband and wife) who perfectly pool income. The objective of the exercise, very much in the spirit of standard search theory, is to characterize the reservation wage behavior of the couple and compare it to the single-agent search model in order to understand the ramifications of partnerships for individual labor market outcomes and wage dynamics. We focus on two main cases. First, when couples are risk averse and pool income, joint-search yields new opportunities--similar to on-the job search--relative to the single-agent search. Second, when couples face offers from multiple locations and a cost of living apart, joint-search features new frictions and can lead to significantly worse outcomes than single-agent search. Finally, in the third chapter, I focus on the relation between house prices and interest rates. Although interest rates and housing prices seem mostly to have a negative relation in the data, the relation does not seem to be stable. For example, the recent run up in the global housing prices is generally explained by globally low interest rates. On the other hand, there have been periods where housing prices and interest rates moved together. Motivated by these observations, I formulate a two period OLG model to find out the form of the relationship between interest rates and housing prices. It appears that the distribution of homeownership is also important for housing price dynamics. I show that housing prices in the equilibrium do not always have a negative relation with interest rates. / text

Aging problem is continually increasing and fertility rates are declining in Hong Kong. The Government of the Hong Kong Special Administrative Region (“The HKSAR Government”) concerns on the long-term care for elderly people. To compare with other developed countries, the retirement protection for elderly people in Hong Kong needs more comprehensive improvement on long-term care expenses. Actually, not many appropriate options of long-term care expenses are seemed available in Hong Kong. Revere mortgage (“RM”) is a way to unlock home equity into regular cash flows without moving out of the house. Reverse mortgage is an emergency financial tool in Hong Kong. The rationale of reverse mortgage is to help the elderly homeowners to convert housing equity to improve their living standard in retirement. Although the Mandatory Provident Fund (“MPF”) was launched in Hong Kong since 2000 and has been operating for more than 10 years, the overall performance of the MPF is less than general expectation of participants that have negative impacts on their retirement plan. The majority of Hong Kong people including the elderly homeowners may not enjoy sufficient protection from MPF after retirement. Similar reverse mortgage programmes have been practicing in the United States, Great Britain, Australia, India, Korea, Japan and Singapore. In contrast, reverse mortgage market is newly growth in Hong Kong. On the other hand, reverse mortgage programmes are tried out in Singapore, India and Korea. In the research, experience of those countries can provide comprehensive and valuable information for references in order to understand more the benefits and drawbacks of reverse mortgage to Hong Kong. Therefore, this dissertation is conducted in several perspectives in Hong Kong in order to show the feasibility of reverse mortgage programme in Hong Kong. It is worth to study whether reverse mortgage could become long-term care expenses for the upper-class housing elderly homeowners, whose residential property has high market value, in Hong Kong. In the dissertation, it is showed that the potential applicants have expectation on reverse mortgage assisting them to overcome their financial burden in the long-term care. The majority of housing values in Hong Kong are adopted to refinance for the upper-class housing elderly homeowners after their retirement. Furthermore, examination of the alternative housing options is whether to be considered for the upper-class housing elderly homeowners. On the other hands, risks and benefits of potential providers of reverse mortgage programme are examined in the dissertation. Further studies on the HKSAR Government in relation to social responsibility, financial issues and regulation issues are conducted. Based on this analysis from different views and aspects, the dissertation is tried to study the feasibility of reverse mortgage whether become long-term care expenses for the upper-class housing elderly homeowners. In addition, it is to understand not only reverse mortgage can whether overcome financial burden for the upper-class housing elderly homeowners, but also understand the perspectives of society, banks and government on reverse mortgage. / published_or_final_version / Housing Management / Master / Master of Housing Management

The population of Hong Kong is getting aged which causes a number of social problem and increasing government expenses. These include decline of workforce, increase demand in health care & social facilities. For individual elderly, the longer life expectancy implied an increasing retirement life and subsequent expenditures. One of the ways to solve the problem is reverse mortgage. It is a financial scheme that helps liquidate the home asset of the elderly homeowner in return of a stable cash stream; by using the self-occupied home as collateral while the elderly are still allowed to line in this home. The objective of this study aims at evaluation the performance of the Hong Kong Reverse Mortgage scheme on improving the standard of living of elderly. The quality of life was adopted as object of value of the standard of living while four dimensions: Life Satisfaction, Self-Esteem, General Health Care & Functional Status and Socioeconomic Status were adopted for measuring quality of life of the elderly. A questionnaire survey was conducted to obtain the opinion on the Hong Kong Reverse Mortgage Scheme. As a whole, the respondents provide a positive feedback and tend to agreed that the Hong Kong Reverse Mortgage scheme help improving the standard of living. In addition, respondents were found particular positive towards the special feature of the Hong Kong Reverse Mortgage scheme: the flexible bequest arrangement and the deferred payment arrangement. Moreover, it was also observed that Tenure Choice was negatively associated with the Age of respondents while the evaluation of effectiveness of the scheme was positively associated with the income change after engaged in the Hong Kong Reverse Mortgage scheme. In depth interviews were also conducted to obtain the opinions of other persons that closely related the Hong Kong Reverse Mortgage scheme. Result suggested that the first reverse mortgage product in Hong Kong is on the right track and more effort should be spend to promote the scheme to the local elderly homeowners. The direction of future study may include other object of values and the corresponding measurement dimensions. / published_or_final_version / Housing Management / Master / Master of Housing Management