Abstract
Between 1980 and 2015, older households in the US more than tripled the use of home mortgage debt. Rather than using owned homes as a source of imputed rent, older households are borrowing against home equity, with loan terms that exceed their expected life spans. Using several data sources, we explore the rising use of mortgages among elderly homeowners. Rising mortgage borrowing provides low-wealth older households with increased liquid assets, but it does not appear to be meaningfully associated with increases in loan defaults. This trend of elderly mortgage borrowing is not explained by increasing levels of income or cohort demographic shifts, but is linked to a rise on ownership of homes by older households in general. However, changes in subsidies associated with mortgage debt partially contribute to differential increases in mortgage use by older households.
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