Young adults’ default intention: influence of behavioral factors in determining housing and real estate loan repayment in India

Abstract

Purpose The primary purpose of this paper is to determine the role of behavioral characteristics of young adults on housing and real estate loan default intentions. The behavioral factors considered in this study are financial literacy, materialism, emotions, indebtedness and risk perception. Design/methodology/approach The sample frame comprises of young clients who have taken house loans and work in India’s metropolitan cities. These cities provide a higher quality of life, more employment possibilities and cheaper living costs. A systematic questionnaire was used, which was divided into six components. A total of 352 valid responses were collected and analyzed through a structural equation model. Findings The findings suggest that financial literacy, materialism and risk perception have a considerable impact on loan default intention among young adults. The results also ascertained that emotion and indebtedness do not have a considerable impact on loan default intention among young adults. Research limitations/implications The scope of this study is limited to India’s metropolitan cities. Future studies can examine comparative examinations of young adults working in the public and private sectors and those working in different cities across India. Practical implications This paper contributes to a better understanding of behavioral variables which may lead to the creation of preventive measures for young defaulters. The findings of this study will help financial institutions to improve their credit-offering models. Originality/value To the best of the authors’ knowledge, this study is the first to determine the role of behavioral attributes of young adults on housing and real estate loan default intentions in India. This work will be executable to all the stakeholders of the housing and real estate industry altogether.

Are expensive decisions impulsive? Young adults’ impulsive housing and real estate buying behavior in India

“…The analysis and results interpreted in the study justify the statement of the possibility of expensive items being impulsively purchased, contradictory to the regular notion that expensive items are bought after proper planning and budgeting. The purchase of housing and real estate is one of the most important and crucial decisions taken by an individual psychologically and financially (Thomas et al , 2022). A lot of thought and analysis is usually involved in such type of purchase.…”

Antecedents of customer mortgage shopping satisfaction: the mediating role of search intensity, evidence from the NSMO survey

“…By applying the PLS-SEM approach, the authors also provide the basis for future use of this data set in consumer behaviour research on mortgages. In recent housing studies, SEM has been used extensively (Usman and Lizam, 2016; Erdogan et al , 2019; Pandey and Jessica, 2019; Thomas et al , 2022). The PLS-SEM approach essentially models the relationship between variables using principal component analysis and OLS multiple regression incorporating path modelling (Hair et al , 2019b).…”

The Effect of Self-Control on Loan Repayment Decisions of Women Market Vendors in Mbeya Municipality, Tanzania

“…Research has shown that having self-control is a key component in making solid financial judgements. It allows for selections aligned with long-term aims and inhibits impulsive or shortsighted choices that can have undesirable implications (Candy & Novita, 2021;Strömbäck, 2020;Thomas et al, 2022). Those who make a concerted effort to become more self-disciplined may improve their financial decisions and attain financial stability and security.…”

“…Several scholars across the globe have tried to establish the influence of self-control on loan repayment decisions. Thomas et al (2022) determined that materialism, financial literacy, and risk perception were statistically significant indicators of the likelihood that young Indians would default on their home loans. They concluded that self-control was necessary to avoid falling into debt.…”