Regional differences in mortgage demand and mortgage instrument choice in the UK

This paper presents empirical evidence of regional variations in mortgage choice decisions within the UK’s mortgage sector. Utilising British Household Panel Survey Data for 2001, 2007 and 2008, the paper suggests that a household’s decision to choose a variable rate mortgage is more likely to occur in areas with lower incomes and affordability rates, such as Northern England, Scotland and Wales. Since variable rate mortgages are more sensitive to income and monetary policy shocks, the disproportional distribution of variable contracts within the mortgage sector may have a differential impact on the regions.