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Mortgage Insurance Adoption in the Netherlands

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  • Ruben H.G.M. Cox
  • Remco C.J. Zwinkels

Abstract

Individuals tend to underinsure on low probability, high consequence risks. Using a survey data set from a unique institutional context, we provide an assessment of the underinsurance puzzle by studying mortgage insurance adoption among Dutch homeowners. The results indicate that the demand for mortgage insurance is affected by risk exposure, type of mortgage lender, and the involvement of financial advisors. We document that wealthier and younger mortgagors are more likely to insure. However, locus of control, house price expectations, and precautionary savings are not related to insurance demand. Finally, we find evidence that borrower (over)confidence negatively affects the likelihood that insurance is bought.

Suggested Citation

  • Ruben H.G.M. Cox & Remco C.J. Zwinkels, 2019. "Mortgage Insurance Adoption in the Netherlands," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 47(4), pages 977-1012, December.
    • Handle: RePEc:bla:reesec:v:47:y:2019:i:4:p:977-1012
    DOI: 10.1111/1540-6229.12157
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    Cited by:

    1. Pih-Shuw Chen & Jia-Jan Lee & Pei-Fen & Ou, 2020. "A Study of Taiwanese Banks’ Home Loan Life Insurance Attached to Home Loans," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 10(6), pages 1-11.
    2. Gaffney, Edward, 2022. "Loan-to-income limits and mortgage lending outcomes," Financial Stability Notes 10/FS/22, Central Bank of Ireland.

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