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

Abstract

PurposeThe 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/approachThe 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.FindingsThe 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/implicationsThe 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 implicationsThis 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/valueTo 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.