Friday, 25 February 2011

Promoting Home Ownership

Earlier in the week Robert Pozen wrote in the FT about reforming US mortgage interest relief.

In the UK, we have tended to promote home ownership by actions on the supply side (large building programmes after the war, right to buy legislation and now affordable housing targets). In the US, mortgage interest deduction addresses the demand side (through reducing the cost to the homeowner). Drawing on SERC research by my colleague Christian Hilber, the article argues that not only is MID costly, but it is also ineffective because the link between mortgage interest deduction and home ownership is pretty weak.

Pozen's article summarises the main findings, but you can download Christian's SERC DP if you would like the details.