Incentives Information and Efficiency in the UK Mortgage Market

The buy to let market, produced through the re-regulation of the private rented market in the late 1980s and the promotion of a new mortgage product by the Association of Residential Letting Agents and private sector lenders in the 1990s, accounted for 12 per cent of all UK mortgage lending by 2007. Buy to let is popularly understood as a vehicle for speculative investment and as a means for securing long-term financial security through capital gains via property, and it represents an important aspect of financialisation, helping to call forth new investor subjectivities, which promulgate individualised forms of financial responsibility. Buy to let was also a profitable income stream for financial institutions in the UK which outperformed the mainstream mortgage market until problems in this market became apparent. This article reports on research carried out on the buy to let market and draws attention to the highly geographical nature of the market, which has distinctive regional and urban geographies. These geographies help to explain the differing fortunes of the buy to let market.

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Economic Mechanism and Cash Flows Modeling for Reverse Mortgage

Finance Theory and Practice ◽

10.26794/2587-5671-2018-22-6-106-120 ◽

2018 ◽

Vol 22 (6) ◽

pp. 106-120

Author(s):

E. V. Kuz’mina ◽

A. A. Yanin

Keyword(s):

Real Estate ◽

Senior Citizens ◽

Market Equilibrium ◽

Cash Flows ◽

Mortgage Lending ◽

Mortgage Market ◽

Reverse Mortgage ◽

Economic Mechanism ◽

Expected Benefits ◽

The Uk

The research is devoted to the economic mechanism of reverse mortgage — a credit product aimed at improving the standard of living of senior citizens, owners of real estate. The idea of the reverse mortgage has been given, as well as the mechanisms of use of real estate owned by senior citizens in order to provide them with additional income. The examples of reverse mortgage in the uS, the uK, Spain and Australia have been given. The authors have also described the methods of reverse mortgage lending in Russia. Based on the analysis of international experience, the economic expediency of investing in this credit tool has been assessed. Considering consumer demand factor, it is possible to calculate the equilibrium rate and, therefore, to find the coordinates of the market equilibrium point. The authors have developed a mathematical model of reverse mortgage for the case of lifetime annuity payments. This model allows to calculate the expected benefits of borrowers and lenders. There have been done (and implemented) two notes that significantly distinguish reverse mortgage modeling from other loan products: 1) a lifetime reverse mortgage does not have a fixed expiration date; 2) when taking a loan of this type, borrowers consider not only consumption, but also accumulation of inheritance. The model allows to calculate the position of break-even points and market equilibrium (relative to the interest rate). This will help economically interested agents to assess the potential of the reverse mortgage market in Russia.

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Perceptions of Regulation on the UK Mortgage Market: A Step Too Far?

International Journal of Business and Management ◽

10.5539/ijbm.v10n8p59 ◽

2015 ◽

Vol 10 (8) ◽

Author(s):

Ehsan Khansalar ◽

Natasha Turner ◽

George Giannopoulos

Keyword(s):

Mortgage Market ◽

The Uk

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Household mortgage demand: a study of the UK, Australia and Japan

International Journal of Housing Markets and Analysis ◽

10.1108/ijhma-03-2017-0029 ◽

2019 ◽

Vol 12 (1) ◽

pp. 110-130 ◽

Cited By ~ 2

Author(s):

Michio Naoi ◽

Piyush Tiwari ◽

Yoko Moriizumi ◽

Norifumi Yukutake ◽

Norman Hutchison ◽

...

Keyword(s):

Demand Function ◽

Income Elasticity ◽

Ordinary Least Squares ◽

Housing Demand ◽

Mortgage Market ◽

Data Sets ◽

Content Type ◽

Institutional Structures ◽

The Uk ◽

Mortgage Demand

PurposeHomeownership has been the main focus of housing policies in most countries. Typical means that households use to achieve homeownership is to take out a loan and supplement this with accumulated wealth for a downpayment. This paper aims to analyze the mortgage demand behavior of households in the UK, Australia and Japan.Design/methodology/approachUsing three panel data sets, HILDA for Australia, KHPS for Japan and USS for the UK, the paper estimates three equations using ordinary least squares: mortgage demand function, housing demand function and initial loan to value ratio function.FindingsThough homeownership is a preferred tenure and the mortgages are “recourse” loans, housing markets in these three countries operate in different mortgage market institutional structures. Results indicate that income elasticity of mortgage demand differ despite income elasticity of housing demand being similar. Different mortgage institutions in countries that pose constraints for borrowers also determine mortgage demand. Other factors such as demography and economic conditions have also played an important role in determining mortgage and housing demand.Originality/valueThe paper is first, to the authors’ knowledge, that explores the role of institutions in mortgage demand in a comparative framework for the UK, Japan and Australia.

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A risk-based pricing systems model of the UK residential mortgage market

10.15396/eres2012_245 ◽

2012 ◽

Keyword(s):

Mortgage Market ◽

Residential Mortgage ◽

Systems Model ◽

The Uk

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The financial returns from buying versus renting

Journal of European Real Estate Research ◽

10.1108/jerer-07-2018-0032 ◽

2019 ◽

Vol 12 (1) ◽

pp. 112-133 ◽

Cited By ~ 1

Author(s):

Abdulkader Mostafa ◽

Colin Anthony Jones

Keyword(s):

Design Methodology ◽

Mortgage Market ◽

Financial Returns ◽

Content Type ◽

Financial Benefits ◽

The Uk ◽

Short Time ◽

First Time ◽

Practical Implications ◽

Substantial Rise

Purpose The UK experienced a substantial rise in owner occupation over the twentieth century, and many tenants still aspire to homeownership. These strong aspirations to own are attributed to a set of financial and non-financial benefits. This paper aims to calculate, for the first time, the financial returns from buying versus renting in Britain for first-time buyers in 11 regions. Design/methodology/approach It applies a DCF approach based on historical housing and mortgage market data from 1975 to 2012. Findings The paper finds strong evidence that, in purely financial terms, buying has been always superior to renting in all regions of the UK over the period. Practical implications It gives a clear message of the financial benefits of homeownership over renting in Britain, even over very short time periods. Originality/value The paper is the first to apply a comprehensive DCF model to the choice between renting and owning.

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