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Mortgages and Financial Expectations: A Household Level Analysis

By Sarah B. Brown, Gaia Garino and Karl B. Taylor

Abstract

We contribute to the literature on household mortgage debt by exploring one particular influence on mortgage debt at the household level, namely the financial expectations of the individuals within the household. Our theoretical model predicts a positive association between the quantity of mortgage debt and optimistic financial expectations. Our empirical findings based on household level data provide convincing support for our theoretical priors in that optimistic financial expectations are positively associated with the level of outstanding mortgage debt

Topics: Financial Expectations, Inter-temporal Consumption, Housing Tenure, Mortgage Debt
Publisher: Dept. of Economics, University of Leicester
Year: 2006
OAI identifier: oai:lra.le.ac.uk:2381/4440

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