The Credit Supply Channel of Monetary Policy Tightening and its Distributional Impacts

Joshua Bosshardt, Marco Di Maggio (), Ali Kakhbod () and Amir Kermani ()
Additional contact information
Marco Di Maggio: Harvard University
Ali Kakhbod: University of California, Berkeley
Amir Kermani: University of California, Berkeley

No 23-03, FHFA Staff Working Papers from Federal Housing Finance Agency

Abstract: This paper studies how tightening monetary policy transmits to the economy through the mortgage market and sheds new light on the distributional consequences at both the individual and regional levels. We find that mortgage supply factors, specifically restrictions on the debt-to-income (DTI) ratio, account for the majority of the decline in mortgages. These effects are even more pronounced for young and middle-income borrowers who find themselves excluded from the credit market. Also, regions with historically high DTI ratios exhibited greater reductions in mortgage originations, house prices, and consumption.

Keywords: interest rates; mortgage lending; house prices; debt-to-income (DTI) (search for similar items in EconPapers)
JEL-codes: E43 G21 G51 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2023-07
New Economics Papers: this item is included in nep-ban, nep-cba, nep-mon and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: The credit supply channel of monetary policy tightening and its distributional impacts (2024)
Working Paper: The Credit Supply Channel of Monetary Policy Tightening and its Distributional Impacts (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:hfa:wpaper:23-03

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