Mortgage loans and event-specific financial education measures

Authors: Valentin Voith, Maximilian Zieser, Stefan Humer
Year of publication: 2024

A relatively large share of Austrians have variable-rate mortgage loans, which have become more expensive lately because of higher interest rates following the monetary policy shift. This has sparked intensified debates in Austria regarding affordability and, in particular, risk-bearing capacity. In addition to regulatory conditions for granting mortgage loans, event-specific financial education measures could serve as another suitable means for reducing individual payment difficulties and overindebtedness, while supporting the societal goal of financial market stability. This article discusses the effectiveness of event-specific measures and summarizes various recommendations for their implementation. Various programs in the USA demonstrate that event-specific training and counseling on the selection and management of mortgage loans can prevent payment defaults and foreclosures. However, the implementation requires scrutiny of several conditions, especially regarding the binding nature, the implementing institutions and the costs involved. Also, we still need to emphasize general, event-independent financial education. To establish evidence of effectiveness for the Austrian credit market, pilot studies and evaluations of corresponding measures are necessary.

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