HOUSING SPECULATION, GSES, AND CREDIT MARKET SPILLOVERS

Natee Amornsiripanitch, Philip E. Strahan, Song Zhang () and Xiang Zheng
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Natee Amornsiripanitch: https://www.philadelphiafed.org/our-people/natee-amornsiripanitch
Song Zhang: https://lerner.udel.edu/faculty-staff-directory/song-zhang-2/

No 24-02, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: In 2021, the U.S. Treasury reduced the exposure of government-sponsored enterprises (GSEs) to speculative mortgages. As a result, GSE purchases of these loans fell by about 20 percentage points. The consequent decline in credit to speculators, however, was mitigated both by entry of corporate investors and because banks began holding more of these loans. By increasing bank exposure to local risk, this move reduced banks’ willingness to supply both jumbo mortgages and small business loans. Our empirical design fully accounts for risks at the balance sheet level. Banks thus manage credit not only in a macro sense — the focus of most research — but also market by market.

Keywords: Housing; Speculation; GSE; Banking (search for similar items in EconPapers)
JEL-codes: G21 R31 (search for similar items in EconPapers)
Pages: 82
Date: 2024-01-04
New Economics Papers: this item is included in nep-ban and nep-ure
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Related works:
Working Paper: Housing Speculation, GSEs, and Credit Market Spillovers (2024)
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DOI: 10.21799/frbp.wp.2024.02

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