Slides now available for seminar held 22 June - Living with Mortgage Break Fees
To view slides please click here
Tuesday 22 June 2010
Rutherford House Lecture Theatre 3
Pipitea Campus, 23 Lambton Quay
12.30-1.30pm
Tea/coffee will be available prior, feel free to bring your lunch. There is no cost to attend this seminar.
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"LIVING WITH MORGAGE BREAK FEES"
We discuss the rationale behind banks charging break-fees to recoup their losses as a result of customers prepaying loans. Next we chart the historical levels of these for New Zealand. Lastly, we develop a model which allows for fluctuations both in banks' wholesale rates and also credit spreads. We find that households can achieve economically significant benefits from both following an optimal prepayment strategy contingent on the break fee used by their bank, and also by selection of fixed interest rate term and break fee structure.
Toby Daglish is a senior lecturer in the School of Economics and Finance at Victoria University of Wellington and a research principal with ISCR. His research areas are derivatives, fixed income, risk management and investments.
Nimesh Patel is a Masters student in Economics and Finance at Victoria University of Wellington and a research assistant with ISCR. His research interests are fixed income securities and financial econometrics.
If you would like to attend this seminar please contact:
mailto:Kathy.McKenzie@vuw.ac.nz or phone: (04) 463-5562