Causes of non-payment of mortgage loans: Theoretical and practical aspects

Due to the significant share of mortgage loans in the portfolio structure of a large number of commercial banks, monitoring the ability of the household sector to repay debts is very important for financial stability. Since the accumulation of non-performing loans in banks' balance sheets is significantly affected by the fall in real estate prices, the paper will explain the factors that affect the cycles in the real estate market.The purpose of this paper is to show research that deals with the causes of non-performance of mortgage loans and the impact of lending standards on reducing systemic risk. In a period of crisis caused by various government measures to combat the COVID-19 pandemic, adequate lending standards are becoming even more important. Special attention in the paper is paid to the influence of LTV raids, the interest rate at which the loan was approved and the maturity of the loan on the probability of occurrence of default status. The paper provides a basis for further research that would include the extent to which the application of certain lending standards has contributed to the reduction of payment delays in the specific business conditions caused by the current pandemic.