Abstract
Abstract In Taiwan, people generally like to purchase their own house but the price of a house is not affordable to everyone. As the result, people tend to largely rely on the mortgage from financial institutions. On the other hand, financial institutions have to face the problem of borrowers making irregular payments. Prepayment and default are the two irregular payment problems effecting financial institutions the most. It is necessary to explore the factors effecting prepayment and default. The factors effecting prepayment and default can be interest rate associated or not. Recent trend of market interest rate displays mild fluctuation, which implies that the effect not associated with interest rate is more important. This study uses logit regression model to empirically analyze how loan term, loan age, loan payment method and seven other independent variables effect prepayment and default. The result shows that factor not associated with interest rate has great effect on borrowers’ irregular payment behavior. Keywords：mortgage, prepayment, default, logit regression model