Buy or rent? Mental health risk trade-offs from job loss between homeownership and mortgage debt.

Housing wealth and homeownership are major determinants of health, with numerous studies pointing to long-term benefits. Many people consider homeownership an important, culturally normative and financially incentivised achievement in life. However, homeownership involves time-sensitive trade-offs: housing purchases are often mortgage-financed, which require regular payments and increase susceptibility to employment shocks. This article examines whether mortgage debt offsets a protective effect of homeownership on mental health after job loss in a quasi-causal staggered difference-in-differences design. We use large population-wide linked registry data from Finland between 2001 and 2019 to identify individuals who experienced long unemployment spells with and without mortgage-financed housing purchases in the three years before the job loss event. We then compare their trajectories of adverse mental health events and medication purchases against two separate control frames of homeowners and of tenants. Our results show that while mortgage strain impairs mental health primarily in the run-up to job loss in comparison to other homeowners, we find a longer-term advantage compared to tenants. However, when opportunities on the job market are scarce, the negative reaction may last longer. The results support the idea that wealth cushions economic shocks, and that debt primarily erodes these benefits in the short term.