Overview
The mortgage market is one of the largest markets in the United States, and represents a key market for banks. Banks issue and portfolio their own mortgages, as well as selling their mortgages into the secondary market. Given its prominence, modeling of mortgages is an important field of study for financial professionals.
Mortgage Ratios
As is common in financial analytics, a set of ratios can be constructed from a mortgage to give a clearer idea of the mortgages value.
- Loan to Value - The size of the loan divided by the value of the underlying property.
- Payment to Income - is the ratio of the monthly loan payments divided by the income of the borrower.