Virtual seminar: João Cocco - London Business School
Topic: Housing Consumption and Investment: Evidence from Shared Equity Mortgages
Seminar organized by the Centre for Banking, Institutions and Development (CBID).
Equity products for housing finance have not become mainstream. We study an exception: a recent UK government-sponsored product. We show that the interaction of house price increases and leverage regulation has promoted adoption. The analysis of an increase in the equity limit shows how households used the additional equity to buy more expensive properties rather than reduce leverage and house price risk exposure. Equity used as complement to debt is likely to be less beneficial for financial stability than when used as substitute. Finally, we measure the equity provider returns, which are impacted by selection and under-valuation at repayment.
A zoom link will be sent via email prior to the event.
For more information on João Cocco, click here
The paper can be accessed here.