Shared-equity mortgages, housing affordability, and homeownership

Andrew Caplin, James H. Carr, Frederick Pollock, Zhong Yi Tong, Kheng Mei Tan, Trivikraman Thampy

    Research output: Contribution to journalArticle

    Abstract

    Although the homeownership rate rose from 65 percent in 1995 to 69 percent in 2005, this rise appears difficult to sustain. We argue that the development of new shared-equity mortgages (SEMs) that blur the lines between debt and equity would propel further advances in homeownership. The rationale for these mortgages is that the broad financial markets would value shares in individual housing returns more highly than hard-pressed prospective homeowners do. We describe a new class of SEMs and provide survey evidence that most households would prefer them to interest-only and other currently popular mortgages. Financial simulations confirm the value of the securitized SEMs to investors. We present computations suggesting that an increase in the overall U.S. homeownership rate of between 1% and 1.5% would likely result from the development of SEM markets.

    Original languageEnglish (US)
    Pages (from-to)209-242
    Number of pages34
    JournalHousing Policy Debate
    Volume18
    Issue number1
    StatePublished - 2007

    Fingerprint

    homeownership
    equity
    housing
    financial market
    homeowner
    debt
    investor
    indebtedness
    Values
    simulation
    market
    present
    evidence

    Keywords

    • Affordability
    • Homeownership
    • Mortgages

    ASJC Scopus subject areas

    • Development
    • Urban Studies
    • Management, Monitoring, Policy and Law

    Cite this

    Caplin, A., Carr, J. H., Pollock, F., Tong, Z. Y., Tan, K. M., & Thampy, T. (2007). Shared-equity mortgages, housing affordability, and homeownership. Housing Policy Debate, 18(1), 209-242.

    Shared-equity mortgages, housing affordability, and homeownership. / Caplin, Andrew; Carr, James H.; Pollock, Frederick; Tong, Zhong Yi; Tan, Kheng Mei; Thampy, Trivikraman.

    In: Housing Policy Debate, Vol. 18, No. 1, 2007, p. 209-242.

    Research output: Contribution to journalArticle

    Caplin, A, Carr, JH, Pollock, F, Tong, ZY, Tan, KM & Thampy, T 2007, 'Shared-equity mortgages, housing affordability, and homeownership', Housing Policy Debate, vol. 18, no. 1, pp. 209-242.
    Caplin A, Carr JH, Pollock F, Tong ZY, Tan KM, Thampy T. Shared-equity mortgages, housing affordability, and homeownership. Housing Policy Debate. 2007;18(1):209-242.
    Caplin, Andrew ; Carr, James H. ; Pollock, Frederick ; Tong, Zhong Yi ; Tan, Kheng Mei ; Thampy, Trivikraman. / Shared-equity mortgages, housing affordability, and homeownership. In: Housing Policy Debate. 2007 ; Vol. 18, No. 1. pp. 209-242.
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