IDEAS home Printed from https://ideas.repec.org/p/use/tkiwps/0905.html
   My bibliography  Save this paper

The Importance of Income and Housing Wealth Constraints for Future Residential Mobility

Author

Listed:
  • W.H.J. Hassink
  • M. van Leuvensteijn

Abstract

We investigate the size of the mark-up on the lending rate for endowment mortgages, due to expected prepayment by the borrower. For this type of mortgage, prepayment is mostly the result of mobility in the housing market. We control for the risk of default by using a unique data set of Dutch borrowers insured against default. The estimates indicate that households with a higher liquidity constraint are less likely to prepay, as they have a lower mark-up on the lending rate. In contrast, the collateral constraint has a very limited influence on the mark-up. We explain this result as follows. Usually, income constraints are generated at the household level, whereas constraints on housing wealth pertain to the regional level. Hence, income changes may improve the relative position of households in the housing market, but an increase in homeowners’ housing wealth does not improve their relative position in the housing market.

Suggested Citation

  • W.H.J. Hassink & M. van Leuvensteijn, 2009. "The Importance of Income and Housing Wealth Constraints for Future Residential Mobility," Working Papers 09-05, Utrecht School of Economics.
  • Handle: RePEc:use:tkiwps:0905
    as

    Download full text from publisher

    File URL: https://dspace.library.uu.nl/bitstream/handle/1874/309429/09_05.pdf
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stefan Groot & Arjan Lejour, 2017. "Tax arbitrage incentives for mortgage prepayment behavior: Evidence from Dutch micro data," CPB Discussion Paper 350, CPB Netherlands Bureau for Economic Policy Analysis.

    More about this item

    Keywords

    Mortgage market; Prepayment; Lending rate; Liquidity constraint; Collateral constraint; Residential mobility;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:use:tkiwps:0905. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Marina Muilwijk) or (Rebekah McClure). General contact details of provider: http://edirc.repec.org/data/eiruunl.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.