How Does Income Multiple of Mortgage Loan Influence Home Repossession in the UK? Evidence from a Macro-Level Data.

This paper presents the findings of the study that examines how income multiple for mortgage loan associates with home repossession in the United Kingdom using macro-level data from the Council of Mortgage Lenders. The study employs a statistical measure for improving regression efficiency with conditioning information in the form of lagged instrument to unravel the pattern ofassociation evident from the data. The study investigates what level of income multiple is optimum –that is the income multiple that minimizes home repossession. The evidence shows that an 18-month and 21-month lags of income multiple generate the best fit in mortgage repossession actions and orders respectively; and income multiples ranging between 2.4 and 2.6 minimize repossessions across the market segments tested –which are: first time buyers, home movers, and the aggregate market