Borrowing risk among young home owners: Prevention, alleviation and the promotion of sustainable alternatives: draft paper

Borrowing risk among young home owners: Prevention, alleviation and the promotion of sustainable alternatives: draft paper

Lawson, J.M.
Parkinson, S.

OTB Research Institute

Housing Systems

2009-09-30

During the 1990s, amidst spiraling house prices and accessible credit, national governments in the Netherlands, the US, Australia and the UK promoted home ownership in rhetoric and policy as the main stream housing solution for working households, also for those with a low income. Recent instability in housing prices is particularly concerning for new entrants into the home ownership market. Young households, purchasing at the height of the boom have been saddled with considerable debt. Those purchasing in declining markets have been left little equity in their home. Repayment arrears, especially amongst borrowers affected by the worsening recession and with sub prime mortgages are on the rise in Australia, the US and the UK. This phenomenon raises questions about the way mortgage markets operate and the role of regulatory agencies therein. This paper examines borrowing risk amongst young home owners, highlighting the situation in Australia, where home ownership has been the centre piece of housing and welfare policy for almost a century. The first section reviews national and international developments in housing markets, with a focus on the generative causes of mortgage default, debates concerning mortgage market regulation and emerging policy responses. the second section combines the use of the Household, Income and Labour Dynamics in Australia (HILDA) survey with other quantitative sources to investigate the repayment capacity of young Australian borrowers with high loan value ratios. The final section argues for a three pronged approach to address mortgage default, which is not only preventative and alleviates mortgage related stress but also promotes alternative forms of mortgage arrangements that promote housing affordability and security.

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Department of Urban Studies, University of Glasgow for the International Sociological Association, Research Committee 43 Housing and the Built Environment

RC 43 International conference Housing Assets, Housing People, Glasgow September 1-4, 2009

Institutional Repository

conference paper

(c) 2009 Lawson, J.M.; Parkinson, S.