Make affordability check compatible with essential consumption

adrian-carro · Apr 15, 2022 · 30e020e · 30e020e
1 parent f153b8c
commit 30e020e
Showing 1 changed file with 10 additions and 5 deletions.
diff --git a/src/main/java/housing/Bank.java b/src/main/java/housing/Bank.java
@@ -368,8 +368,8 @@ MortgageAgreement requestApproval(Household h, double housePrice, double desired
  if (isHome) {
  // Affordability constraint: it sets a maximum value for the monthly mortgage payment divided by the
  // household's monthly gross employment income
- double affordable_principal = getHardMaxAffordability() * h.getMonthlyGrossEmploymentIncome()
- / getMonthlyPaymentFactor(true, h.getAge());
+ double affordable_principal = getHardMaxAffordability(h.getMonthlyGrossEmploymentIncome())
+ * h.getMonthlyGrossEmploymentIncome() / getMonthlyPaymentFactor(true, h.getAge());
  if (getMonthlyPaymentFactor(true, h.getAge()) == 1.0) affordable_principal = 0.0;
  approval.principal = Math.min(approval.principal, affordable_principal);
  // Loan-To-Income (LTI) constraint: it sets a maximum value for the principal divided by the household's
@@ -472,7 +472,7 @@ MortgageAgreement requestApproval(Household h, double housePrice, double desired
  if (isHome) {
  // Affordability constraint: it sets a maximum value for the monthly mortgage payment divided by the
  // household's monthly gross employment income
- double affordable_max_price = max_downpayment + getHardMaxAffordability()
+ double affordable_max_price = max_downpayment + getHardMaxAffordability(h.getMonthlyGrossEmploymentIncome())
  * h.getMonthlyGrossEmploymentIncome() / getMonthlyPaymentFactor(true, h.getAge());
  if (getMonthlyPaymentFactor(true, h.getAge()) == 1.0) affordable_max_price = max_downpayment;
  max_price = Math.min(max_price, affordable_max_price);
@@ -637,9 +637,14 @@ private double getLoanToValueLimitOld(boolean isFirstTimeBuyer, boolean isHome)
 
  /**
  * Get the most constraining affordability limit, between the private and the central bank policies
+ * @param monthlyGrossEmploymentIncome The monthly gross employment income of this household
+ * @return The affordability limit applicable to this household
  */
- private double getHardMaxAffordability() {
- return Math.min(hardMaxAffordability, centralBank.getHardMaxAffordability());
+ private double getHardMaxAffordability(double monthlyGrossEmploymentIncome) {
+ double limitGivenByEssentialConsumption =
+ 1.0 - config.ESSENTIAL_NOMINAL_CONSUMPTION / monthlyGrossEmploymentIncome;
+ return Math.min(limitGivenByEssentialConsumption,
+ Math.min(hardMaxAffordability, centralBank.getHardMaxAffordability()));
  }
 
  /**