Individual Landlords in the Mortgage Market

UNIVERSITY OF TECHNOLOGY SYDNEY
Finance Department
Research Seminars in Finance

Lakshmi Naaraayanan

Paper Title: Individual Landlords in the Mortgage Market
 
Speaker:  Lakshmi Naaraayanan, London Business School
 
Time and Date: 12-1 pm, Wednesday 14th August 2024 (AEST)
 
Location: CB08.08.002, Level 8, Building 8, University of Technology Sydney, Australia (Map of campus)

Abstract: We use administrative data on the universe of mortgage originations to individual landlords in the United Kingdom to study their asset and financing choices around a large unexpected increase in interest rates. The event led to an increase in rental yields driven by a decline in property values, in spite of rents continuing to increase. There is a large decline in the number of landlords purchasing properties with mortgages. Loan originations become more concentrated in smaller lenders who increase mortgage rates less for larger landlords. They counteract this by charging higher fees, allowing a reduction in interest coverage ratios. We also find that after the event there is an increased likelihood of property market exit by landlords.

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