Cooling the mortgage loan market: The effect of borrower-based limits on new mortgage lending

Result code in IS VaVaI
<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F61989100%3A27510%2F23%3A10251627" target="_blank" >RIV/61989100:27510/23:10251627 - isvavai.cz</a>
Alternative codes found
RIV/61384399:31110/23:00058910
Result on the web
<a href="https://www.sciencedirect.com/science/article/pii/S0261560623000098" target="_blank" >https://www.sciencedirect.com/science/article/pii/S0261560623000098</a>
DOI - Digital Object Identifier
<a href="http://dx.doi.org/10.1016/j.jimonfin.2023.102808" target="_blank" >10.1016/j.jimonfin.2023.102808</a>

Result language
angličtina
Original language name
Cooling the mortgage loan market: The effect of borrower-based limits on new mortgage lending
Original language description
This paper studies the effects of regulatory measures concerning maximum loan-to-value (LTV), debt-to-income (DTI), and debt service-to-income ratios (DSTI) on new loans secured by residential property. It uses loan-level regulatory survey data on about 82,000 newly granted residential mortgage loans in Czechia from 2016 to 2019 to estimate the average effects of regulatory measures and their heterogeneous effects depending on borrower, loan, bank, and regional characteristics. We find that the LTV limits decreased the mortgage loan size only slightly, while the value of collateral securing the loans increased. Only the additional DTI and DSTI limits helped reduce the average loan size significantly and prompted more risk-sensitive pricing that heighten the average lending rate. The mortgage market response to the limits appears heterogeneous in loan size rather than pricing or collateralization. The loan size reduction varied with the borrower's income, age, and location. High-income, high-repayment, and 25 to 35 years old borrowers reduced their contracted loan size more. Borrowers located in regions with higher GDP per capita and lower unemployment rates reduced the contracted loan size more. Longer-maturity loans showed a greater drop in the contracted loan size.
Czech name
—
Czech description
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Type
J<sub>imp</sub> - Article in a specialist periodical, which is included in the Web of Science database
CEP classification
—
OECD FORD branch
50206 - Finance

Project
<a href="/en/project/GA19-19485S" target="_blank" >GA19-19485S: Spatial Dynamics and Inequality: The Role of Connectivity and Access to Finance</a><br>
Continuities
P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Publication year
2023
Confidentiality
S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

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