A stable, well-functioning financial market for all
A stable, well-functioning financial market for all
FI Analysis 51: A model for households’ housing choices
Households that experience greater buying power tend to choose homes of a higher standard over amortisation payments or savings. This is evident in a new model that Finansinspektionen (FI) has developed.
In order to gain more knowledge about how households make decisions about housing purchases and how greater buying power could impact household demand for loans, FI has developed a model that describes households’ housing choices. The model estimates the probability of households choosing different housing options if the conditions on the housing and mortgage market change; for example, if amortisation and mortgage rules would change.
“FI’s analysis indicates that households experiencing greater buying power as a result of milder mortgage rules will prioritise more expensive homes with higher housing costs over amortisation payments or other saving. Such a development would lead to more households with high debt. This is an important basis in FI’s continued analysis of household debt and the mortgage market,” says FI’s Chief Economist Jon Thor Sturluson.
