A New Paradigm in Mortgage Loan Advice

DOI: 10.5176/2251-1938_ORS13.22

Authors: Margrét S. Otterstedt, Kourosh M. Rasmussen, Murat Kulahci

Abstract:

The Danish mortgage market has undergone considerable changes during the last 15 years. New and more complex variations of loan products have been introduced. Nevertheless, mortgage loan advice has remained, by large, unchanged. This paper addresses a study where a number of new refinancing rules are constructed with the help of a stochastic optimization model and the data mining method, CART.

Keywords: stochastic optimization; CART; mortgages loans; house hold refinancing advice;