NET WEALTH, MARGINAL TAX RATES AND THE DEMAND FOR HOME MORTGAGE DEBT

I explore the determinants of the demand for home mortgage borrowing t o satisfy non-housing portfolio objectives. This component of the dema nd for mortgage debt is empirically identified from a model in which i nstruments for housing demand and net wealth are utilized. The estimat ion of mortgage demand is performed on Canadian household survey data. The Canadian tax rules on deductibility of mortgage interest enhance my ability to identify mortgage demand and measure the effect of house hold marginal tax rates. Controlling for tax rates, wealth and househo ld sociodemographic attributes, I am able to estimate the effect of as set choices on mortgage demand.