Abstract
Second mortgages accounted for 10.8% of the stock of outstanding mortgage debt at the end of 1987, up from 3.6% at the beginning of the 1980s. This paper investigates the determinants of second mortgage borrowing and the characteristics of second mortgage borrowers. We present cross-sectional evidence suggesting that households with second mortgages are less wealthy than other households: each dollar of second mortgage borrowing is associated with a 75 cent reduction in household net worth. While these results cannot be given a causal interpretation, they are consistent with the view that increased access to second mortgages has reduced personal saving.
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