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Article
Publication date: 26 November 2024

Åke Gunnelin, Rosane Hungria-Gunnelin, Maria Hullgren and Bo Söderberg

Rent control may lead to inefficient use of subsidized apartments. This paper aims to empirically investigate if this phenomenon exists under the Swedish rent control regime.

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Abstract

Purpose

Rent control may lead to inefficient use of subsidized apartments. This paper aims to empirically investigate if this phenomenon exists under the Swedish rent control regime.

Design/methodology/approach

The quantitative part of the study uses data from Statistics Sweden to calculate, for all municipalities in Sweden, the fraction of residential rental units where no one is living permanently. The qualitative part augments the quantitative results with a survey where representatives for 14 municipal and four private property companies in small, mid-sized and large municipalities were interviewed.

Findings

This paper finds that a surprisingly large fraction of the rental housing stock, about 9.4% on a national level, is underused in the way that rent is paid but no one is living permanently in the apartment according to the official Swedish population register. The underutilization rate is negatively correlated to the median rent in a municipality.

Research limitations/implications

The study is limited to Swedish data. This paper does not explore the potential effects of regional economic and demographic conditions on the measure of underutilization.

Practical implications

A policy implication of the present results is that underutilization of the Swedish rental housing stock can be reduced by limiting the supply of rent-controlled housing to households that are in economic or social need.

Originality/value

Numerous papers have analysed various aspects of rent control. However, few papers have empirically analysed how a general rent control system where all tenants, irrespective of economic or social need, have access to rent controlled apartments may contribute to housing inefficiencies. This research contributes to the empirical literature on rent control by analysing the relationship between non-targeted housing subsidies and underutilization of housing units.

Details

International Journal of Housing Markets and Analysis, vol. 17 no. 7
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 17 August 2017

Maria Hullgren

This paper aims to highlight co-ops mortgage choice strategy and factors that influence the board’s master mortgage decisions in Swedish co-op associations.

248

Abstract

Purpose

This paper aims to highlight co-ops mortgage choice strategy and factors that influence the board’s master mortgage decisions in Swedish co-op associations.

Design/methodology/approach

Data are collected through a pre-study interviewing chair persons in co-ops in Stockholm followed up by a more extensive questionnaire. Answers from these are tested by logistic regression and compared to hypotheses based on earlier findings on mortgage choice on a household level and additional findings from the interviews.

Findings

The mortgage choice in co-ops seems to be more dependent on financial similarities than physical location. Loan-to-value (LTV) ratios have a dominant influence in that co-ops with high LTV ratios have a lower preference for adjustable-rate mortgages (ARMs). When checking for location, the media and individual chair persons also seem to affect the choice. Overall, there seems to be awareness in co-ops boards about the potential financial effects of their mortgage choice.

Practical implications

The negative connection between high LTV ratios and ARMs implies that boards try to make their mortgage expenditure more predictable. This reduces liquidity risks which may be of importance for financially constrained owners. Findings indicate that co-ops are risk averse and that the short-term threat for increasing interest costs is low. This is of value to both homebuyers and the financial industry.

Originality/value

This paper examines factors influencing mortgage choices in an organizational context such as co-op associations. The master mortgage in a co-op can have major influence on members financial situation but, to the author’s knowledge, a similar study has never been done before, neither in an international nor a Swedish context.

Details

International Journal of Housing Markets and Analysis, vol. 10 no. 4
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 4 July 2016

Maria Hullgren and Inga-Lill Söderberg

The purpose of this paper is to investigate driving forces behind mortgage rate choice among homeowners in a market of no mortgage rate spread. The study reported on was conducted…

783

Abstract

Purpose

The purpose of this paper is to investigate driving forces behind mortgage rate choice among homeowners in a market of no mortgage rate spread. The study reported on was conducted in Sweden, a country relatively spared both from effects of the subprime crisis and the on-going Euro-crisis. A number of potentially influential factors, such as respondents’ risk aversion, financial vulnerability, experience, expectations as well as the impact of media and bank advisors are examined and a number of demographic factors controlled for.

Design/methodology/approach

The study reported on is based on data from a national randomized survey conducted in Sweden in 2012. An empirical analysis is carried out on a sample of 474 households with mortgages. A logistic regression is performed to test a model based on hypothesized factors.

Findings

The study shows that consumers choosing fixed rate mortgages (FRMs) have high LTV and high risk aversion and perceive their choice as having been influenced by bank advisors. This is in line with earlier findings. Lower levels of – or no – FRMs (more adjustable rate mortgages) seems to be attractive for the wealthier with higher education and previous experience of home owning. Other factor negatively affecting the choice of FRMs are: being younger; being influenced by media; and perceiving oneself as financially vulnerable.

Research limitations/implications

To summarize, this paper contributes to research in two major ways: first, the Swedish case is modeled against a review of international research on mortgage rate choice. Second, a number of consumer-related factors are investigated, and their relative contribution as drivers of a choice of FRMs are tested. This gives input to more theoretical research conceptualizing a model for the understanding of how consumer mortgage rate choices are made.

Practical implications

The results should serve as an alarm bell for the industry, as the consumers described – the youngest mortgage holders, the financially vulnerable with low repayment capacity and those easily influenced by reports in media – are a potential threat to stable development of long term customer relations and mortgage portfolios.

Social implications

The results gives reason for policy makers to address the question and reasons to call for more studies of the preferences and choices of the younger consumers.

Originality/value

This study represents an investigation into some factors not often studied in relation to mortgage rate choice. It also highlights the Swedish case and puts it in an international context.

Details

International Journal of Bank Marketing, vol. 34 no. 5
Type: Research Article
ISSN: 0265-2323

Keywords

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Article
Publication date: 31 May 2013

Maria Hullgren and Inga‐Lill Söderberg

The purpose of this paper is to investigate consumer characteristics that influence Swedish consumers' mortgage rate decisions, such as the choice between an adjustable rate…

897

Abstract

Purpose

The purpose of this paper is to investigate consumer characteristics that influence Swedish consumers' mortgage rate decisions, such as the choice between an adjustable rate mortgage (ARM) and a fixed rate mortgage (FRM).

Design/methodology/approach

Data were collected in a randomised survey of the Swedish population in 2010. Through binary logistic regression, the effects of education, income and risk aversion on household mortgage decisions are investigated. In addition, consumers' financial literacy and self‐reported ability to handle sudden mortgage rate increases are examined. A test of gender effects is also performed.

Findings

The results show that a lower level of education, lower income, lower financial literacy, and trouble handling interest rate increases influence Swedish consumers to choose ARMs. Gender does not significantly affect the overall results. However, a gender‐divided regression shows that age, a low level of education and risk averseness significantly affect men's mortgage choices, whereas income, trouble handling interest rate increases and low financial literacy significantly affect women's mortgage choices.

Practical implications

The most vulnerable Swedish consumers choose FRMs to a greater extent and, thereby, make future expenditures more predictable for the single household by reducing liquidity risks.

Originality/value

This paper tests a number of characteristics in predicting consumers' mortgage choices, emphasises the importance of loan takers' ability to cope with sudden mortgage rate increases, highlights the importance of financial literacy in understanding consumers' financial choices and elucidates the Swedish case.

Details

International Journal of Housing Markets and Analysis, vol. 6 no. 2
Type: Research Article
ISSN: 1753-8270

Keywords

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