Monetary Conditions and Community Redistribution through Mortgage Markets

Manish Gupta and Steven Ongena
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Manish Gupta: Nottingham University Business School

No 24-28, Swiss Finance Institute Research Paper Series from Swiss Finance Institute

Abstract: We examine the redistributive impact of 30-year mortgage and federal funds rates on mortgage lending between 1995 and 2021. Between 2008 and 2014, the Fed deployed Quantitative Easing (QE) by purchasing mortgage-backed securities, intendedly lowering mortgage rates. We find that lending is regressive pre-QE, becomes progressive during the QE era, and then reverts to being regressive following the QE's conclusion until 2019. Nonbank lending becomes regressive when the federal funds rate increases between 2015 and 2019, and this pattern persists during the pandemic. In contrast, while banks lend regressively until 2019, they refinance progressively during the pandemic.

Keywords: Inequality; Mortgage; Financial Crisis; Quantitative Easing (QE); COVID-19; Nonbanks (search for similar items in EconPapers)
JEL-codes: E52 G01 G21 G23 G51 H23 R23 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2024-04
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mon and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:chf:rpseri:rp2428

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