Mortgage Market Maturity and Homeownership Inequality among Young Households: A Five-Country Perspective

Alena Bičáková and Eva Sierminska

No 90, SOEPpapers on Multidisciplinary Panel Data Research from DIW Berlin, The German Socio-Economic Panel (SOEP)

Abstract: This paper uses the newly constructed Luxembourg Wealth Study data to document cross-country variation in homeownership rates and the homeownership-income inequality among young households in Finland, Germany, Italy, the UK and the US, and relate it to cross-country differences in mortgage market maturity. We find that aside from Italy, homeownership rates and inequality in the four countries correspond to their mortgage take up rates and its distribution across income, reflecting the different degree of development of their respective mortgage markets. In Italy, alternative ways of financing, such as family transfers, substitute the limited mortgage availability and explains the second highest homeownership rate in our sample, despite the lowest mortgage take up. The mortgage market in the UK is the most open and the most equal, which leads to the highest and most equally distributed homeownership in this country as well. The mortgage market in Germany is on the other side of the spectrum with very low mortgage take-up rates and strong dependence of homeownership and mortgage take up on household income. Finland and the US are in-between. Counterfactual predictions suggest that although household characteristics play some role in explaining the variation in home ownership rates across the five countries, it is mostly the country specific effects of these characteristics determined by the institutional environment as well as the functioning of the housing and mortgage markets that drive the main result.

Keywords: Homeownership; credit constraints; mortgage market (search for similar items in EconPapers)
JEL-codes: D14 D31 G21 R21 (search for similar items in EconPapers)
Pages: 58 p.
Date: 2008
New Economics Papers: this item is included in nep-eec and nep-ure
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Citations: View citations in EconPapers (4)

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Working Paper: Mortgage Market Maturity and Homeownership Inequality among Young Households: A Five-Country Perspective (2008)
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