Interest Rates, Housing finance and the Distribution of Income

Abstract

Examines the changed impact of interest rates on households′ post‐interest disposable income given the rise in house ownership financed largely through mortgage borrowing during the 1980s. Suggests that the high level of mortgage indebtedness now permits a rise in interest rates to curtail consumer spending much more powerfully than was the case at the beginning of the 1980s. Concludes that as a result of changes in building society funding and a rise in personal sector net floating‐rate liabilities, the effect of a unit rise in interest rates is twice as large at the end of the 1980s as it was at the beginning.

Citation

Howells, P. and Tomlin, K. (1991), "Interest Rates, Housing finance and the Distribution of Income", Journal of Property Finance, Vol. 2 No. 3. https://doi.org/10.1108/09588689110034855