Easing of borrower-based measures: Evidence from Czech loan-level data☆

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F61989100%3A27510%2F25%3A10258377" target="_blank" >RIV/61989100:27510/25:10258377 - isvavai.cz</a>

Alternative codes found

RIV/49777513:23510/25:43975711

Result on the web

<a href="https://www.sciencedirect.com/science/article/pii/S0378426625001098#ack0001" target="_blank" >https://www.sciencedirect.com/science/article/pii/S0378426625001098#ack0001</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1016/j.jbankfin.2025.107489" target="_blank" >10.1016/j.jbankfin.2025.107489</a>

Result language

angličtina

Original language name

Easing of borrower-based measures: Evidence from Czech loan-level data☆

Original language description

We analyze the impact of easing borrower-based measures on residential mortgage credit and borrower characteristics in the Czech Republic in early 2020. This easing included a relaxation of the LTV limit and the abolition of the DTI and DSTI limits. Our findings indicate that affected households increased borrowing, purchased more expensive houses, and accepted lower collateral values. Borrowers&apos; debt service burdens rose but were offset by income growth. We find that: (i) LTV-constrained borrowers exhibited cash-retention behavior, while DTI- and DSTI-constrained borrowers aligned with the financial accelerator motive; (ii) LTV relaxation had a greater effect in poorer counties, while the abolition of DTI and DSTI limits affected richer regions; (iii) younger borrowers were more impacted by LTV and DTI easing, whereas DSTI easing influenced older borrowers; and (iv) LTV relaxation primarily affected first-time borrowers, while the abolition of DTI and DSTI limits impacted repeat borrowers, who obtained larger mortgages and purchased more expensive properties. We analyze the impact of easing borrower-based measures on residential mortgage credit and borrower characteristics in the Czech Republic in early 2020. This easing included a relaxation of the LTV limit and the abolition of the DTI and DSTI limits. Our findings indicate that affected households increased borrowing, purchased more expensive houses, and accepted lower collateral values. Borrowers&apos; debt service burdens rose but were offset by income growth. We find that: (i) LTV-constrained borrowers exhibited cash-retention behavior, while DTI- and DSTI-constrained borrowers aligned with the financial accelerator motive; (ii) LTV relaxation had a greater effect in poorer counties, while the abolition of DTI and DSTI limits affected richer regions; (iii) younger borrowers were more impacted by LTV and DTI easing, whereas DSTI easing influenced older borrowers; and (iv) LTV relaxation primarily affected first-time borrowers, while the abolition of DTI and DSTI limits impacted repeat borrowers, who obtained larger mortgages and purchased more expensive properties.

Czech name

—

Czech description

—

Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

—

OECD FORD branch

50202 - Applied Economics, Econometrics

Project

<a href="/en/project/GA25-17638S" target="_blank" >GA25-17638S: Geopolitical Risks, Pandemics and Macro-Financial Stability</a><br>

Continuities

P - Projekt vyzkumu a vyvoje financovany z verejnych zdroju (s odkazem do CEP)

Publication year

2025

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Journal of Banking and Finance

ISSN

0378-4266

e-ISSN

1872-6372

Volume of the periodical

178

Issue of the periodical within the volume

September

Country of publishing house

NL - THE KINGDOM OF THE NETHERLANDS

Number of pages

19

Pages from-to

107489

UT code for WoS article

001510114100001

EID of the result in the Scopus database

2-s2.0-105007704022