Housing Consumption and Investment: Evidence from Shared Equity Mortgages

Abstract We exploit a U.K. government-sponsored product and provide evidence on shared equity mortgages. The analysis shows how the interaction of house price growth leverage regulation promotes adoption. Following an increase in limit, households use additional financing to buy more expensive properties rather than reduce leverage. Equity used as complement debt is likely less beneficial for financial stability when substitute. borrowers are change lenders refinancing their senior debt. Finally, we measure provider returns, which affected by selection undervaluation at repayment.