Mortgage Debt Research Articles

Raising Children, Rising Debt: Mortgage Debt Among American Families

American households owe more than $12 trillion in mortgages, which represents the main source of a family’s debt. Scholars connect mortgages to the desire of families, especially better-off households, to seek housing in neighborhoods with good schools for their children, which tend to be more expensive. Although this perspective assumes a children–mortgage link, we do not know whether having children actually increases mortgage, nor whether and how this relationship varies by household income. To examine these issues, we use eleven waves of the Panel Study of Income Dynamics data between 1997 and 2017 and individual fixed effects, as well as propensity score matching and a quasi-experimental design. Our analyses show that generally, (1) families with children are more likely to have mortgage debt and in greater amounts; (2) it is families in the 60th to 100th income percentile who have the most mortgage debt; and (3) critically, families in the roughly 10th to 60th income percentile have more mortgage debt due to having children. These findings defy assumptions that it is well-to-do families that take on more mortgage debt as part of intensive or concerted cultivation parenting practices. Rather, our findings suggest that families who take on mortgage debt related to their children tend to be those in more economically precarious positions for whom debt for the sake of kids may be a financial burden. As such, our findings provide suggestive evidence that financially intensive parenting may contribute to growing wealth inequality among American families with children.

Local Agglomeration and Household Mortgage Debt

Using detailed household data, we find that households working in locally agglomerated economies have high mortgage loans and are more likely to have mortgage loans. Channel testing shows that local agglomeration increases housing and mortgage demand as well as mortgage supply. The increase in mortgage loans is driven by purchases of larger houses and smaller down payments. Mechanism analyses document that local agglomeration affects mortgage loans by increasing career upward potential and providing downside protection. Specifically, we find that the impact of local agglomeration is stronger for skilled employees with enhanced prospects. In addition, local agglomeration weakens the negative relation between unemployment and mortgage loans, which supports the downside-protection role of local agglomeration. These results hold under instrumental variables analysis, difference-in-difference analysis, and a set of robustness checks. Overall, our findings highlight the importance of local labor market composition in household mortgage debt. This paper was accepted by Kay Giesecke, finance. Funding: F. F. Chen acknowledges the financial support provided by the Fundamental Research Funds for the Central Universities; the MOE Project of Key Research Institute of Humanities and Social Science in University [Grant 22JJD790094]; and the 111 Project [Grant B18033]. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2022.03486 .

The sweet burden: Does homeownership improve the economic status of households?

This study utilizes household-level micro survey data from China to investigate the impact of homeownership on the economic status of households and the underlying mechanisms. The findings reveal that homeownership does not enhance the economic status of households. This outcome may be attributed to the inherent immobility of housing as a physical asset and the substantial financial pressure imposed by housing loans, leading to a “housing mortgage slave effect” and reduced job mobility among homeowners. These conclusions remain robust after accounting for endogeneity issues and preforming a series of robustness checks. Moreover, the study finds that homeownership is significantly and negatively associated with changes in the economic status of households without intergenerational financial support, whereas it has no significant effect on those without such support. This suggests that financial supports can alleviate the burden of mortgage debt, therefore mitigating the adverse relationship between homeownership and changes in household economic status.

Unlocking housing wealth through mortgage debt: do patterns and motivations vary by age?

Successive waves of house price appreciation have prompted homeowners to tap into housing wealth, increasing mortgage debt to meet spending needs. This paper addresses three questions about equity borrowing behaviour via panel-data modelling. First, how do homeowners’ asset and debt portfolios affect equity borrowing behaviour? Second, is equity borrowing influenced by financial behaviours relating to saving, planning and risk-taking? Third, do equity borrowing drivers vary by age? Our findings confirm that equity borrowing is generally influenced by asset and debt portfolios, with notable age-related differences. Younger homeowners exhibit greater sensitivity to changes in primary home value and debt, and risk willingness. Income, labour force status and ownership of other property are crucial for those aged 55–64, while homeowners aged 65+ are generally insensitive to asset, debt or income changes. We discuss policy implications, emphasizing the prospects of longer working lives among pre-retirees, the need for safeguards for elderly equity-borrowers, and the welfare consequences of later-life debt burdens or homeownership loss.

Inframarginal Borrowers and the Mortgage Payment Channel of Monetary Policy

Despite the widespread use of fixed-rate mortgages in the United States, I show that monetary policy is effectively passed through to aggregate outstanding mortgage debt service. Using credit bureau, lender, and servicer data on mortgage payments and originations and exogenous monetary policy shocks, I estimate a mortgage rate semi-elasticity of payments over 10. Inframarginal borrowers---households whose choice to buy a home or refinance does not depend on the particular monetary policy decision under consideration---are the most important conduit, explaining over half of the pass-through. Consistently large flows of inframarginal borrowing relative to the stock of outstanding debt account for the strength of this channel. Households with adjustable-rate mortgages and marginal refinancers, the focus of much of the literature on monetary policy's effect on mortgage borrowers, each explain about 20 percent of the pass-through. I show the mortgage payment channel induces a lag in the operation of policy, as the cumulative effects on debt service build over time in response to persistent shocks to longer-term rates. Estimated magnitudes suggest that mortgage payments are a primary channel by which monetary policy affects consumption.

A review on American senior housing and financing decisions

Purpose The world population is getting older and housing decisions matter to the security of retirement life and well-being. However, senior housing and financing decisions are largely overlooked in the literature. This study aims to provide a comprehensive overview of the senior housing and financing decisions in the USA. Design/methodology/approach Using 2021 American Housing Survey data and ordinary least squares estimates, this paper studies senior housing and financing decisions in the 15 most populous US metropolitan areas. Multiple regressions are used to analyze the whole sample as well as various subsamples. Findings This paper finds strong evidence that seniors are more likely to own a house with a higher market value compared with nonseniors. More specifically, although race and gender do not matter in this relationship, it is less pronounced among those with higher education. Also, seniors, especially white senior homeowners, are more likely to have a lower mortgage debt burden due to a higher upfront down payment than nonseniors. Last, seniors are more likely to refinance their homes and receive cash than nonseniors. Research limitations/implications Constrained by the data limitations, this study specifically focuses on seniors’ housing and mortgage decisions. Future research could involve exploring seniors’ mortgage decisions by considering factors such as mortgage loan terms, borrower credentials and the evolving landscape of the senior housing market, among other aspects. Practical implications The findings would help policymakers and contractors in the construction industry better understand the uniqueness of challenges in the senior housing market and develop effective housing policies and programs that cater to the needs of the elderly. A comprehensive understanding of the senior housing market would also help seniors make informed purchase and financing decisions. Social implications The authors propose providing financial education to the elderly, particularly those of disadvantaged status, to improve their expertise and bargaining skills in the mortgage loan application process. Originality/value This paper contributes to understanding the dynamic senior housing market, which encounters challenges and opportunities associated with the aging population. The study fills the gap of limited research regarding seniors’ housing decision and their financing choices in the USA and would help policymakers and contractors in the construction industry develop effective housing policies and programs that cater to the needs of the elderly.

Mortgage debt and domestic and outbound travel expenditures: International evidence

We explore the relationship between the mortgage debt of households and their spending on domestic and outbound tourism and travel. We estimate a dynamic panel data model for a sample of 27 countries for 2010-2021, and find evidence for a negative relationship. Hence, we show that in countries where the mortgage per capita is high, residents allocate fewer expenditures on domestic and outbound tourism. We also find that the reduction in outbound tourism spending is more pronounced than the decrease in domestic tourism spending. Our findings can benefit policymakers and firms in the tourism industry by providing the knowledge necessary for creating successful promotional strategies.

Credit Market Conditions and Mental Health

Research offers conflicting predictions about the impact of credit conditions on mental health. We first assess how bank regulatory reforms that improved credit conditions, for example, by enhancing the efficiency of credit allocation and lowering lending rates, impacted mental health. We discover that among low-income individuals, these regulatory reforms reduced mental depression, boosted labor market outcomes, eased access to mortgage debt, and reduced the ranks of the “unbanked.” We also find that mergers of large regional banks that led to branch closures and tighter credit constraints in affected counties harmed the mental health of lower-income individuals in treated counties. This paper was accepted by Kay Giesecke, finance. Funding: C. Lin and M. Tai acknowledge financial support from the National Natural Science Foundation of China [Grant 72192841] and the Research Grants Council of the Hong Kong Special Administration Region, China [Project T35/710/20R]. Supplemental Material: The online appendix and data files are available at https://doi.org/10.1287/mnsc.2023.00194 .

Identifying the transmission channels of credit supply shocks to household debt: Price and non-price effects

Using UK matched microdata, I show that credit supply shocks affect mortgage debt via two channels: one that operates through price conditions in credit markets; and another that operates through non-price credit conditions and affects the quantity of credit supplied by lenders. I find substantial heterogeneity in the different channels by household characteristics. Lower-income households and first-time buyers are especially sensitive to changes in the supply of riskier lending. Home-owners, higher-income households and older borrowers increase debt following shocks to either type of credit conditions, with loosening in mortgage spreads, maximum LTI limits and loan approvals being strongly correlated with their borrowing levels. In aggregate, household leverage responds more strongly to supply shocks that change the quantity of credit, as they affect households across the distribution, both at the intensive and at the extensive margin. But a loosening in price and non-price credit conditions simultaneously or a contraction in multiple price indicators at a time can also fuel rapid credit growth.

Another twist in the taxation of non-monetary contributions of properties and mortgage debt for the purposes of Spanish transfer tax, capital duty and stamp duty: the projection of EU law onto domestic situations and the need for clarification of the Span

Another twist in the taxation of non-monetary contributions of properties and mortgage debt for the purposes of Spanish transfer tax, capital duty and stamp duty: the projection of EU law onto domestic situations and the need for clarification of the Span

HOUSEHOLD DEBT AND THE EFFECTS OF FISCAL POLICY

AbstractWe examine how the effects of government spending shocks depend on the balance sheet position of households. Employing U.S. household survey data, we find a large, positive consumption response for households with mortgage debt, smaller response for renters, and an insignificant response for outright homeowners, in response to a positive government spending shock. We consider a model with three types of households and show that it can successfully account for these findings. Liquidity constraints and wealth effects play a crucial role in shock propagation. Our findings suggest the importance of household mortgage debt position in the transmission mechanism of fiscal policy.

The Impact of Curbing Housing Speculation on Household Entrepreneurship in China

We document a speculation channel and complement the well-documented collateral channels by offering novel evidence about the effect of curbing housing speculation policies We estimate the positive effect of discouraging housing speculation on household entrepreneurship in China. By exploiting the city-level variations in the stringency of home purchase restrictions between 2011 and 2019 and five waves of China Household Finance Survey (CHFS) data, we find that discouraging housing speculation significantly increases the likelihood of local households starting a business. To address endogeneity concerns, we exploit plausibly exogenous variation using IV estimations and DID research design. The positive effect is stronger for local multiple-home owners, homeowners without mortgage debt, households with previous entrepreneurial experience, households of risk-loving, and households with large assets. This conclusion is robust with city-level evidence. In the mechanism discussion, we find that discouraging housing speculation significantly reduces the likelihood and the plans of local households to purchase new homes and lowers the house price expectations of local households (thus the opportunity cost of starting a business). We also provide evidence supporting the view that discouraging housing speculation increases entrepreneurial opportunities, innovative development, and local households’ social network investments, all of which contribute to starting a business. The results imply that policies to curb housing speculation can lead to beneficial spillover on entrepreneurship and the local economy, as well as contribute to the sustainability of economic growth.

Aantekeninge: Afgeleide wyse van eiendomsverkryging op ’n onroerende saak gehou in mede-eiendom vereis steeds ’n saaklike ooreenkoms met álle mede-eienaars

Aantekeninge: Afgeleide wyse van eiendomsverkryging op ’n onroerende saak gehou in mede-eiendom vereis steeds ’n saaklike ooreenkoms met álle mede-eienaars

House price bubbles under the COVID-19 pandemic

We analyze bubble formations in house prices under the COVID-19 pandemic in 382 metropolitan areas in the U.S. with a special attention to the role of population density. We use a robust sieve-bootstrap version of the right-tailed unit root test procedure to identify periods of explosiveness in price–rent ratios across metro areas when controlling for fundamentals such as mortgage debt financing costs and the wealth of households. The bubble tests reveal evidence of explosive house prices during the COVID-19 pandemic but with important cross-area differences. In contrast to earlier bubble episodes, we find that the frequency and size of bubble formations under the pandemic have been stronger in low-density metro areas compared to high-density metro areas.

Household debt and children’s psychological well-being in China: The mediating role of parent–child relations

BackgroundHousehold debt is a psychological stressor for those who take the debt on, but it remains unclear whether and how this money-related stressor influences children’s psychological well-being. AimsThe study investigated the association of household debt with children’s psychological well-being and further explored the mediating role of parent–child relations. MethodsData were obtained from two waves (2016 and 2018) of the China Family Panel Studies, with a sample of 1,828 children included. The Center for Epidemiological Studies of Depression Scale was applied to measure psychological well-being. Household debt was assessed by absolute and relative amounts of total debt, mortgage debt, and non-mortgage debt. We used positive and negative parent–child interaction to measure parent–child relations. The characteristics of children, parents, and households were included as covariates. ResultsHousehold debt, especially mortgage debt, was positively associated with psychological illnesses among children, and the link was substantially explained by parent–child relations. ConclusionHousehold debt exerted detrimental effects on children’s psychological well-being by jeopardizing parent–child relations in China. Strategies that address the need of vulnerable children are required to reduce the potentially negative psychological well-being outcomes of household debt.

حقوق وخيارات حائز العقار المرهون رهناً رسمياً "دراسة تحليلية مقارنة "

Among the most important provisions in the official mortgage contract is the right of the mortgagee creditor to encumber the mortgaged property after the mortgage debt has not been paid as agreed. In this way, the law defends the inalienable right of the mortgagee creditor against all infringements. Mortgagee creditor rights may be impacted by legal relations between the debtor and others, so the legislator is keen on granting mortgagee creditors the right to track the mortgaged property wherever they may be. The legislator, however, balanced the rights of the possessor and mortgagee creditor by providing the possessor with rights and options through which he can defend his right of ownership of the mortgaged property, including the right to pay the mortgagee's creditors with all the defenses the mortgagor had against including, but not limited to, prescription payments, fulfillment payments, discharge payments, etc. His rights to a mortgaged property could be preserved through options such as repaying the debt, purifying the property, vacating it, or having the mortgagee commence enforcement proceedings.

Study on the Dynamic Relationship Between Individual Mortgage Policy and Housing Price Fluctuation in Zhejiang Province -Empirical Analysis Based on SVAR

The eastern Chinese province of Zhejiang is highly developed and contributes to the real estate business. The paper uses quarterly data from 2011 to 2021 to create a Structural Vector Autoregressive (SVAR) model to explore the empirical dynamics between personal housing credit policies and house price changes in Zhejiang Province, China. Impulse response and variance decomposition research reveal that loan interest rates considerably affect housing values. Interest rates affect property values by 0.85% to 30.19% over time. The initial rise in loan interest rates boosts real estate values, but the successive increase will lower them until stability is reached. Large personal mortgage loans also affect housing prices. Throughout time, the share of factors affecting property prices with respect to mortgage loans ranges from 2.32% to 4.31%. The size of mortgage debt boosts home values. Thus, a corresponding easing of mortgage borrowing ceilings will boost home prices. The causal relationship between GDP and housing price swings is unclear, although its impact is stable with modest variations within a limited range. Zhejiang Province should be cautious when adjusting personal mortgage loans and interest rates while improving regulatory control. These techniques reduce market speculation and negative factors to ensure market stability and longevity.

Household portfolios in Türkiye: Results from the household finance and consumption survey

This paper analyzes the distribution of household portfolios in Türkiye using a fresh data set, the Central Bank of the Republic of Türkiye – Household Finance and Consumption Survey. The empirical analysis concentrates on the motives behind household saving preferences and the distribution of household portfolios. Moreover, the financial situation of households in Türkiye is compared with Euro area countries. First, we find that income and household characteristics are among the leading determinants of households' portfolio choices in Türkiye. Second, we reveal that households’ portfolios are under-diversified, since they own relatively small amounts of financial wealth and hold a few types of financial assets. Furthermore, risky asset categories such as shares of publicly traded companies are rarely included among them. Third, households are more likely to invest in financial assets as their income increases, but the share of financial assets in total wealth remains subdued as household income increases, since at that point real estate wealth becomes dominant. Finally, we discover that households are more likely to be in debt in Türkiye compared to households from the Euro area. Additionally, they are more likely to accumulate non-collateralized debt and also private debt, which is owed to friends and relatives to be repaid. However, the percentage of households with mortgage debt and the share of mortgage debt in total household liabilities are smaller in Türkiye, suggesting that many households have to rely on their own funds or private loans to purchase homes. As a result, we can argue that households need to be encouraged to invest a larger share of their wealth in financial assets to raise household savings and to deepen financial markets in Türkiye.

Housing Financialization and the State, in and Beyond Southern Europe: A Conceptual and Operational Framework

ABSTRACT This article sets out a conceptual/operational framework designed to analyse how the state has enabled, promoted and shaped housing financialization. We build on the systematic analysis of literature and legislation in Portugal, Spain, Italy and Greece, thereby providing an overview of housing financialization in Southern Europe. We identify six modes of housing financialization (mortgage debt, mortgage securitization, social rented housing, market rental housing, housing companies, “not-for-housing housing”), characterized by relative autonomy and specific mechanisms, plus a number of cross-cutting dimensions. Our conceptual/operational framework allows to systematically inquiry whether the state has passively adapted to global transformations or shaped these transformations in turn, therefore advancing two main contributions: first, contributing to a more precise conceptualization of the mechanisms of housing financialization; and, second, providing operational instruments to explore state action and policy in housing financialization beyond Southern Europe.

Place Attachment and Aging in Place: Preferences and Disruptions.

This paper examines the links between place attachment and older persons' preferences to age in place, and factors that disrupt these preferences. We use data from the 2001-2021 Household, Income and Labour Dynamics in Australia Survey and panel-data modelling to confirm strong associations between several place attachment dimensions and aging-in-place preferences. Strong ties to children, strong social capital, residence in social housing, homeownership status, housing wealth, and home and neighborhood satisfaction are all positively linked to a stronger preference to age in place. Our findings reveal important differences between older homeowners and older non-owners. For owners, closeness to children is a strong predictor of aging-in-place preferences, although mortgage debt can trigger involuntary moves. For non-owners, tenure security achieved through longer durations at one's address of residence is linked to stronger aging-in-place preferences. However, private renters are more often exposed to involuntary moves. We discuss the policy implications of these disruptions.