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Macroprudential policy, mortgage cycles and distributional effects : evidence from the UK

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dc.contributor.author Peydró, José-Luis
dc.contributor.author Rodríguez Tous, Francesc
dc.contributor.author Tripathy, Jagdish
dc.contributor.author Uluc, Arzu
dc.date.accessioned 2021-02-12T11:22:40Z
dc.date.available 2021-02-12T11:22:40Z
dc.date.issued 2020-06
dc.identifier.uri http://hdl.handle.net/10230/46465
dc.description.abstract Macroprudential regulators worldwide have introduced regulations to limit household leverage in light of existing evidence which suggests that high leverage is associated with household distress during crisis. We analyse the distributional effects of such a macroprudential policy on mortgage and house price cycles. For identification, we exploit the universe of UK mortgages and a 15%-limit imposed in 2014 on lenders—not households—for high loan-to-income ratio (LTI) mortgages. Despite some regulatory arbitrage (e.g. increases in LTV and average loan size), more-constrained lenders issue fewer high-LTI mortgages. Partial substitution by less-constrained lenders leads to overall credit contraction to low-income borrowers in local-areas more exposed to constrained-lenders, lowering house price growth. Following the Brexit referendum (which led to house-price correction), the 2014-policy strongly implies—via lower pre-correction debt—better house prices and mortgage defaults during an episode of house price correction.
dc.format.mimetype application/pdf
dc.language.iso eng
dc.relation.ispartofseries Barcelona GSE Working Paper;1183
dc.subject.other Macroprudential policy
dc.subject.other Mortgages
dc.subject.other Credit cycles Inequality
dc.subject.other House prices
dc.title Macroprudential policy, mortgage cycles and distributional effects : evidence from the UK
dc.type info:eu-repo/semantics/workingPaper
dc.rights.accessRights info:eu-repo/semantics/openAccess


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