The repayment of mortgages by endowment assurances
Abstract
Looks at the problem of endowment assurances that do not meet their targets to repay residential mortgages. By analysing the present value of payments under different inflation and interest‐rate regimes, we conclude that the perceived problems with endowment policies may simply be a manifestation of “money illusion”. Nevertheless, there could be frictional problems and other problems arising from the use of endowment assurances to repay mortgages which we identify but do not analyse in detail. The failure of such a major method of repaying mortgages to perform in line with expectations will have implications for the residential housing market.
Keywords
Citation
Booth, P. and Rodney, B. (2002), "The repayment of mortgages by endowment assurances", Journal of Property Investment & Finance, Vol. 20 No. 2, pp. 116-126. https://doi.org/10.1108/14635780210420016
Publisher
:MCB UP Ltd
Copyright © 2002, MCB UP Limited