Arbeitspapier
Financial literacy, present bias and alternative mortgage products
Choosing a mortgage is one of the most important financial decisions made by a household. Financial innovation has given rise to more complex mortgage products with back-loaded payments, known as 'Alternative Mortgage Products' (AMPs), or 'nterest-Only Mortgages'. Using a specially designed question module in a representative survey of UK mortgage holders, we investigate the effect of consumer financial sophistication on the decision to choose an AMP instead of a standard repayment mortgage. We show poor financial literacy and present bias raise the likelihood of choosing an AMP. Financially literate individuals are also more likely to choose an adjustable rate mortgage, suggesting they avoid paying the term premium of a fixed rate mortgage.
- Sprache
-
Englisch
- Erschienen in
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Series: CeDEx Discussion Paper Series ; No. 2015-15
- Klassifikation
-
Wirtschaft
Household Behavior: General
Consumer Economics: Empirical Analysis
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- Thema
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mortgages
financial literacy
present bias
alternative mortgage products
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Gathergood, John
Weber, Jörg
- Ereignis
-
Veröffentlichung
- (wer)
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The University of Nottingham, Centre for Decision Research and Experimental Economics (CeDEx)
- (wo)
-
Nottingham
- (wann)
-
2015
- Handle
- Letzte Aktualisierung
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10.03.2025, 11:42 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Gathergood, John
- Weber, Jörg
- The University of Nottingham, Centre for Decision Research and Experimental Economics (CeDEx)
Entstanden
- 2015
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