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Health uninsurance premium and mortgage interest rates

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  • Gill, Balbinder Singh

Abstract

I show that lenders charge higher interest rates on mortgage-financed houses in areas with a higher rate of health uninsurance to protect themselves against a potential future bankruptcy of the borrower caused by health uninsurance. The health uninsurance premium is higher for applicants who are more likely to file for bankruptcy and for mortgage-financed houses in areas where there are greater benefits to obtaining insurance or where there is a higher percentage of uninsured people who cannot afford insurance. The premium is lower following the implementation of the requirement to have qualifying health insurance coverage under the Affordable Care Act.

Suggested Citation

  • Gill, Balbinder Singh, 2023. "Health uninsurance premium and mortgage interest rates," International Review of Financial Analysis, Elsevier, vol. 87(C).
    • Handle: RePEc:eee:finana:v:87:y:2023:i:c:s1057521923001631
    DOI: 10.1016/j.irfa.2023.102647
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    More about this item

    Keywords

    Mortgage interest rate; Household finance; Health uninsurance risk premia;
    All these keywords.

    JEL classification:

    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private

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