This chapter investigates whether mortgage regulation assures proper decision-making by borrowers. It offers regulatory responses to mitigate a “mortgage illusion” phenomenon revealed in recent experimental studies. According to these experiments, buyers are influenced by the comparison between the monthly rental payment and the monthly mortgage installment for fixed-rate mortgages. Therefore, consumers are more likely to buy a house when the rent is higher than the mortgage installment. The chapter suggests that regulators account for this phenomenon when designing mortgage policies.
|Title of host publication||Measuring the effectiveness of real estate regulation|
|Subtitle of host publication||interdisciplinary perspectives|
|Place of Publication||Cham|
|Publisher||Springer International Publishing|
|Number of pages||14|
|Publication status||Published - 1 Jan 2020|