The researcher, Marco Felici, based at the University of Cambridge found the movement to mortgage-free makes the most positive impact to mental health, even when compared to other housing changes e.g. moving from renting to having a mortgage.
The transition to outright homeownership has not been given as much attention in previous research, but the researcher argues that it is important to focus on it because it represents a fundamental discontinuity in people’s lives, one that appears to have larger consequences than the transition to mortgaged homeownership, at least for some indicators of mental health.
The researcher actually found that sometimes there is a worsening in mental health following the transition to mortgaged homeownership from renting.
Moreover, while the dwelling most likely changes when transitioning from renting to mortgaged ownership, the dwelling remains the same when transitioning from mortgaged to outright homeownership. This rules out that part of the material channel connecting tenure to mental health that has to do with housing quality, unless major renovations are carried out together with the tenure transition. Therefore security in terms of risk of eviction and the financial relief linked to the end of the mortgage payments is what overall improves people’s mental health.
The author concludes, “While the existing literature largely focused on either cross-sectional or longitudinal results over short panels, I show that it is important to tease out how this relationship evolves dynamically over time, especially to appreciate the role for mental health of the transition to outright homeownership.”
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