No pension and no house? The effect of LTV limits on the housing wealth accumulation of selfemployed

“Borrowing constraints do not hamper self-employed more than wage-employed”

Buying a home could be an attractive alternative to privately saving for a pension, especially for the self-employed. However, this option could be hampered by borrowing constraints introduced in the wake of the Global Financial Crisis. The higher mortgage down payments required could make it harder for the self-employed to become homeowners and therefore acquire wealth. However that has not proven to be the case. Other factors, such as income volatility, make it harder for the self-employed to obtain a mortgage.

Key Takeaways for the Industry

  • Policies aimed at monetising home equity after retirement, such as reverse mortgages and cash-out loans, could affect the self-employed more directly.
  • Whether young self-employed people are keener to save for a first home than for a personal pension or other pension alternatives remains unclear, but this choice is not specifically affected by borrowing constraints.

Netspar, Network for Studies on Pensions, Aging and Retirement, is a thinktank and knowledge network. Netspar is dedicated to promoting a wider understanding of the economic and social implications of pensions, aging and retirement in the Netherlands and Europe.


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