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House Prices, Second Mortgages and Household Savings; An Empirical Investigation for the Netherlands, 1987-1994

Author

Listed:
  • Jan Rouwendal

    (Vrije Universiteit Amsterdam)

  • Rob Alessie

    (Vrije Universiteit Amsterdam)

Abstract

Since the beginnings of the eighties house prices in the Netherlands haveincreased steadily and considerably. In this paper we study the effect of this developmenton the demand for second mortgages and on the savings of Dutch households. We use the dataof the Dutch socio-economic panel for the years 1987-1994. These data contain self-reportedvalues of the houses of owner- occupiers, which are shown to correspond to the median salesprices provided by the Dutch Association of Realtors. Households therefore seem to be wellaware of the increase in the value of their house. We use panel data methods to investigatethe effect of house prices on (i) the number and size of second mortgages, (ii) the savingsof owner-occupiers and (iii) the savings of renters that may be considered as would-beowners. We find a significant effect of home equity on the demand for second mortgages.Savings of homeowners decrease when house prices accelerate. We find no evidence that inc!reased demand for mortgage loans is caused by substitution from other forms of consumercredit. Contrary to results reported in the literature, we find no evidence of an increasein savings of would-be owners caused by higher house prices.

Suggested Citation

  • Jan Rouwendal & Rob Alessie, 2002. "House Prices, Second Mortgages and Household Savings; An Empirical Investigation for the Netherlands, 1987-1994," Tinbergen Institute Discussion Papers 02-074/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20020074
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    Citations

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    Cited by:

    1. Francesco Caloia & Mauro Mastrogiacomo, 2021. "The Housing Wealth Effect: a comparative study of Italy and the Netherlands," Working Papers 713, DNB.
    2. Anna van der Schors & Rob Alessie & Mauro Mastrogiacomo, 2007. "Home and mortgage ownership of the Dutch elderly; explaining cohort, time and age effects," CPB Discussion Paper 77.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    3. Anna van der Schors & Rob J.M. Alessie & Mauro Mastrogiacomo, 2007. "Home and Mortgage Ownership of the Dutch Elderly: Explaining Cohort, Time and Age Effects," Social and Economic Dimensions of an Aging Population Research Papers 183, McMaster University.
    4. Davis, E. Philip & Zhu, Haibin, 2009. "Commercial property prices and bank performance," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(4), pages 1341-1359, November.
    5. Nancy van Beers & Michiel Bijlsma & Remco Mocking, 2015. "House Price Shocks and Household Savings: evidence from Dutch administrative data," CPB Discussion Paper 299, CPB Netherlands Bureau for Economic Policy Analysis.
    6. Davis, E. Philip & Zhu, Haibin, 2011. "Bank lending and commercial property cycles: Some cross-country evidence," Journal of International Money and Finance, Elsevier, vol. 30(1), pages 1-21, February.
    7. Anna Schors & Rob Alessie & Mauro Mastrogiacomo, 2007. "Notes and Communications," De Economist, Springer, vol. 155(1), pages 99-121, March.
    8. Nancy van Beers & Michiel Bijlsma & Remco Mocking, 2015. "House Price Shocks and Household Savings: evidence from Dutch administrative data," CPB Discussion Paper 299.rdf, CPB Netherlands Bureau for Economic Policy Analysis.

    More about this item

    Keywords

    House Prices; Mortgages; Savings; Consumption; Panel Data.;
    All these keywords.

    JEL classification:

    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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