A Structural Model of Mortgage Offset Accounts in the Australian Housing Market*

I study a novel institutional feature of Australian housing markets: the widespread use of mortgage offset accounts. These accounts reduce mortgage interest costs and increase mortgage liquidity. I build a heterogeneous agent life‐cycle model of the Australian housing market to study who uses and benefits from these mortgage products. Households in middle age and with larger incomes, houses, and mortgages are most likely to use offset accounts and generally derive larger benefits from their use. I show that a social planner could maintain mortgage profitability, improve welfare for many households and more evenly distribute benefits by adjusting the price structure of offset accounts.

• Publication year

  2025

• Venue

  The Economic Record

• Publication date

  2025-09-01

• Fields of study

  Not labeled

• Identifiers
  DOI 10.1111/1475-4932.70007
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

• Investment Housing Tax Concessions and Welfare: A Quantitative Study for Australia

  2023cited by this paper
• Stuck at home: Housing demand during the COVID-19 pandemic

  2022cited by this paper
• Pensions, Income Taxes and Homeownership: A Cross-Country Analysis

  2021cited by this paper
• HOMEOWNERSHIP AND HOUSING TRANSITIONS: EXPLAINING THE DEMOGRAPHIC COMPOSITION

  2020cited by this paper
• Costly reversals of bad policies: The case of the mortgage interest deduction

  2020cited by this paper
• Do Credit Conditions Move House Prices?

  2019cited by this paper
• Implications of US Tax Policy for House Prices, Rents, and Homeownership

  2018cited by this paper
• The Housing Boom and Bust: Model Meets Evidence

  2017cited by this paper
• Mortgage Debt, Consumption, and Illiquid Housing Markets in the Great Recession

  2017cited by this paper
• Liquidity Constraints in the U.S. Housing Market

  2017cited by this paper
• Saving up or settling down: home ownership over the life cycle

  2014cited by this paper
• The Wealthy Hand-to-Mouth

  2014cited by this paper
• Modelling the demand for housing over the life cycle

  2012cited by this paper
• An inter-temporal general equilibrium analysis of the Australian age pension means test

  2011cited by this paper
• Housing policy and the progressivity of income taxation

  2009cited by this paper
• The Loan Structure and Housing Tenure Decisions in an Equilibrium Model of Mortgage Choice

  2007cited by this paper
• Accounting for Changes in the Homeownership Rate

  2007cited by this paper
• Offset Mortgages Popular Elsewhere, but Here?

  2005cited by this paper

• No citing papers are available for this paper.