In the present work, we propose to study the effect of ignoring flashing on the performance of a natural circulation loop operating under steady state. To this end, the performance of a rectangular natural circulation loop with water as the working fluid has been simulated considering both homogeneous equilibrium model (HEM) and drift flux model (DFM) for the. two-phase zone. It has been observed that flashing has a substantial effect on the performance of the loop in certain operating zones and one may even experience an anomaly in the predicted value of local temperature if flashing is neglected. Flashing, in general, reduces the circulation rate under steady operating condition. But at the same time it makes the operation of the loop more stable against Ledinegg instability. In general, the effect of flashing is predominant at low pressure and low heat flux. (C) 2017 Elsevier Ltd. All rights reserved.