Macroprudential policy, mortgage cycles and distributional effects: Evidence from the UK
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- dc.contributor.author Peydró, José-Luis
- dc.contributor.author Tous, Francesc R.
- dc.contributor.author Tripathy, Jagdish
- dc.contributor.author Uluc, Arzu
- dc.contributor.other Universitat Pompeu Fabra. Departament d'Economia i Empresa
- dc.date.accessioned 2024-11-14T10:10:16Z
- dc.date.available 2024-11-14T10:10:16Z
- dc.date.issued 2020-06-01
- dc.date.modified 2024-11-14T10:06:51Z
- 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 lendersâ not householdsâ 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 impliesâ via lower pre-correction debtâ better house prices and mortgage defaults during an episode of house price correction.
- dc.format.mimetype application/pdf*
- dc.identifier https://econ-papers.upf.edu/ca/paper.php?id=1725
- dc.identifier.citation Review of Financial Studies, accepted.
- dc.identifier.uri http://hdl.handle.net/10230/68692
- dc.language.iso eng
- dc.relation.ispartofseries Economics and Business Working Papers Series; 1725
- dc.rights L'accés als continguts d'aquest document queda condicionat a l'acceptació de les condicions d'ús establertes per la següent llicència Creative Commons
- dc.rights.accessRights info:eu-repo/semantics/openAccess
- dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/3.0/es/
- dc.subject.keyword macroprudential policy; mortgages; credit cycles; inequality; house prices.
- dc.subject.keyword Finance and Accounting
- dc.title Macroprudential policy, mortgage cycles and distributional effects: Evidence from the UK
- dc.title.alternative
- dc.type info:eu-repo/semantics/workingPaper