The Mortgage Illusion

Nelson Camanho, Catholic University of Portugal, Portugal
Daniel Fernandes, Catholic University of Portugal, Portugal
Homebuyers compare the monthly rental payment and the monthly installment of a mortgage when deciding to buy a house. They are more likely to buy a house if the mortgage monthly installment is lower than the monthly rental payment. Our results are robust to ownership bias and homebuyers’ budget constraints.
[ to cite ]:
Nelson Camanho and Daniel Fernandes (2017) ,"The Mortgage Illusion", in NA - Advances in Consumer Research Volume 45, eds. Ayelet Gneezy, Vladas Griskevicius, and Patti Williams, Duluth, MN : Association for Consumer Research, Pages: 547-548.