The Marginal Effect of Government Mortgage Guarantees on Homeownership

Serafin J. Grundl and You Suk Kim
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Serafin J. Grundl: https://www.federalreserve.gov/econres/serafin-j-grundl.htm
You Suk Kim: https://www.federalreserve.gov/econres/you-suk-kim.htm

No 2019-027, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: The U.S. government guarantees a majority of residential mortgages, which is often justified as a means to promote homeownership. In this paper we use property-level data to estimate the effect of government mortgage guarantees on homeownership, by exploiting variation of the conforming loan limits (CLLs) along county borders. We find substantial effects on government guarantees, but find no robust effect on homeownership. This finding suggests that government guarantees could be considerably reduced with modest effects on homeownership, which is relevant for housing finance reform plans that propose to reduce the government?s involvement in the mortgage market by reducing the CLLs.

Keywords: Federal Housing Administration; Government mortgage guarantees; Government-sponsored enterprises; Homeownership (search for similar items in EconPapers)
JEL-codes: G21 R31 R38 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2019-04-16
New Economics Papers: this item is included in nep-ban and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedgfe:2019-27

DOI: 10.17016/FEDS.2019.027

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