Determinants of Home Loan Delinquency: The case of IDLC Finance Limited

While analyzing the loan delinquency behavior of home-loan borrowers of a Bangladeshi non bank financial institution, this paper investigated the determinants of home-loan delinquency. The primary contribution of the research delineated in this paper is to demonstrate the importance of borrower specific characteristics in determining the risk of credit loss on housing loan repayment for the lending institutions. It has been documented that the financial aspects of customers have significant influence on timely home-loan repayment risk. Firstly, customers with high loan to value ratio, high fixed obligation to income, higher debt burden ratio and higher installments to income ratio force the borrowers to become delinquent. Secondly, for the lending institutions the behavioral aspects should also be strongly considered, since it is evidenced in developing countries like Bangladesh, that though the customers might have high income or high property value yet they might be delinquent because of lack of their willingness to repay timely.