The housing costs can be a substantial financial burden to households particularly for low-income households. The median of the ratio of housing cost over income gives an indication of the financial pressure that households face due to housing costs.

The most common measure for housing affordability used here is the “housing cost overburden rate”, which measures the proportion of households or population that spend more than 40% of their disposable income on housing cost.  The housing costs can refer to a narrow definition based on rent and mortgage costs (principal repayment and mortgage interest) and other is wider definition that also includes costs of mandatory services and charges, regular maintenance and repair, taxes and utilities, also referred to as “total housing costs.

Countries with substantially higher mortgage burdens on low-income households compared to households in the third quintile include Canada, the United States, and several Southern European. Access to mortgages, mortgage conditions, loan-to-value and loan-to-income ratios are likely to contribute to these variations across countries and income quintiles (André, 2016; Whitehead and Williams, 2016). By contrast, in Finland, Norway, the Netherlands and Switzerland, owner-with-mortgage households in the bottom and the third quintiles of the income distribution face similar median mortgage burdens.