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Title: Life Cycle Mortgage Payment and Forced Saving
Authors: 林祖嘉;C.L Chen;S.J. Lin
Lin, Chu-Chia;Chen, Chien-Liang;Lin, Sue-Jing
Keywords: Life Cycle;Mortgage Payment;Forced Savings
Date: 2000
Issue Date: 2009-01-09 12:15:45 (UTC+8)
Abstract: A common puzzling phenomenon over the household survey of Taiwan is
that the renters' saving rate is higher than that of the owners', while the latter
has a higher average income than the former. One reason for this feature is
that certain housing owners have to pay a greater amount of mortgage
payment that is not included in saving. And on the other hand, the saving
decision is correlated with the tenure decision, while the tenure decision is
also correlated with the household's life cycle, in addition to income. And
therefore, when one tries to estimate the correct saving rate, he or she has
to consider the household's life cycle as well.
In this study, we apply a data set of the household survey of Taiwan to
investigate the correlation of life cycle, mortgage payment, and forced
savings. First of all, we estimate the saving rate in a traditional way, and
then estimate the saving rate after the adjustment of mortgage payment. To
figure out the correct saving rate with the tenure decision, we evaluate
different households' saving behaviors according to different cohorts, and
consequently, we could check how life cycle plays its role in this model. And
our finding is, that for every cohort, the forced savings is significant for
owners with mortgage and for renters as well.
Relation: International Real Estate Review,3(1),109-141
Data Type: article
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