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Contribution Details
| Type | Working Paper |
| Scope | Discipline-based scholarship |
| Title | Mortgage Credit and Housing Markets |
| Organization Unit | |
| Authors |
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| Language |
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| Institution | University of Zurich |
| Series Name | - |
| Number | - |
| Abstract Text | This paper investigates how mortgage credit conditions affect housing markets and the demand for homeownership. Using unique data on homeowners' listings and transactions and exploiting policy-driven changes in mortgage credit conditions in China, I provide empirical evidence that tightened mortgage credit conditions have a negative effect on housing demand and prices. Estimating a structural model of households' demand and supply of residential properties, I obtain measures for market liquidity and bargaining power of home buyers and sellers and find that mortgage interest rates and down payment requirements negatively affect the value of owning residential properties. With counterfactual experiments, I quantify the impact of mortgage interest rates, down payment requirements, property tax rates, and transaction tax rates on housing demand, supply, and prices. At the cost of a welfare loss for home buyers (owners), 1 percentage point higher mortgage interest rates (property tax rates) reduce demand-supply imbalance and decrease the average transaction price by 2.3% (1.9%), which cannot be achieved with higher transaction tax rates. |
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| Additional Information | Job Market Paper |