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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title The causal effect of house prices on mortgage demand and mortgage supply
Organization Unit
  • Christoph Basten
  • Cathérine Koch
  • English
Institution University of Zurich
Series Name Working paper series / Department of Economics
Number 140
ISSN 1664-7041
Number of Pages 50
Date 2014
Abstract Text We identify the causal effect of house prices on mortgage demand and supply in Switzerland by exploiting exogenous shocks to immigration and thereby to house prices. Detailed micro data allow us to observe multiple offers for each mortgage request. We find a 1% increase in house prices to raise the requested mortgage amount by 0.52%. Due to positive feedback effects, the entire partial correlation is 0.78%. While we find higher house prices to increase mortgage demand, they induce banks to make fewer offers and charge higher rates, especially later in the boom and especially for highly leveraged households.
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Keywords House prices, mortgage demand, mortgage supply, instrumental variables, Immobilienwirtschaft, Hypothek, Hypothekengeschäft, Nachfrage