The causal effect of house prices on mortgage demand and mortgage supply: evidence from Switzerland

Christoph Basten and Catherine Koch
Authors registered in the RePEc Author Service: Catherine Tahmee Casanova

No 555, BIS Working Papers from Bank for International Settlements

Abstract: 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 on individual requests and offers allow to close down possible other channels. We find that within the same interest rate environment 1% higher house prices imply 0.52% higher mortgage amounts. The full partial correlation of 0.78% suggests also positive feedback from mortgage volumes to house prices. While we find higher house prices to increase mortgage demand, banks respond if anything with fewer offers and higher rates, especially later in the boom and for highly leveraged households.

Keywords: House prices; mortgage demand; mortgage supply; IV (search for similar items in EconPapers)
Pages: 52 pages
Date: 2016-03
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://www.bis.org/publ/work555.pdf Full PDF document (application/pdf)
http://www.bis.org/publ/work555.htm (text/html)

Related works:
Journal Article: The causal effect of house prices on mortgage demand and mortgage supply: Evidence from Switzerland (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:555

Access Statistics for this paper

More papers in BIS Working Papers from Bank for International Settlements Contact information at EDIRC.
Bibliographic data for series maintained by Martin Fessler ().