Borrower-Based Measures, House Prices and Household Debt

Francesco Caloia

Working Papers from DNB

Abstract: This paper investigates the direct effect on household debt of macroprudential borrowerbased measures, namely Loan to Income (LTI) and Loan to Value (LTV) limits. The analysis focuses on the Netherlands, in a period characterized by growing vulnerabilities from the housing market and changes in the macroprudential policy. Results show that a LTI limit targeting debt repayment capacity is only binding at the left tail of the income distribution. Instead, a progressive tightening of the LTV limit that did not impose any downpayment constraint doubled the share of LTV-constrained borrowers. Results also show the role of increasing house prices as additional binding constraints for household borrowing choices.

Keywords: Borrower based measures; macroprudential policy; LTV; LTI; DSTI (search for similar items in EconPapers)
JEL-codes: D14 G21 (search for similar items in EconPapers)
Date: 2022-02
New Economics Papers: this item is included in nep-cba and nep-ure
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:dnb:dnbwpp:738

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