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The Importance of Income and Housing Wealth Constraints for Future Residential Mobility.
- Source :
- Housing Studies; Jun2011, Vol. 26 Issue 4, p575-591, 17p, 4 Charts
- Publication Year :
- 2011
-
Abstract
- This paper investigates to what extent the mark-up on the lending rate for mortgages depends on expected prepayment. It identifies the effect of the risk of expected prepayment by using a unique dataset of Dutch borrowers insured against default. It is argued that expected prepayment is mainly caused by expected residential mobility of the borrower, which might be due to a change of the value of the collateral or because of a change of income of the borrower. The estimates indicate that lenders require a higher mark-up on the lending rate from households with a lower liquidity constraint, while the collateral constraint has a very limited influence on the mark-up. Thus, it appears that lenders take into account of the possibility that future income shocks may improve the relative position of households in the housing market. [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 02673037
- Volume :
- 26
- Issue :
- 4
- Database :
- Complementary Index
- Journal :
- Housing Studies
- Publication Type :
- Academic Journal
- Accession number :
- 60610033
- Full Text :
- https://doi.org/10.1080/02673037.2011.559755