Mortgage stress tests and household financial resilience under monetary policy tightening

Jonathan Hartley and Nuno Paixão

No 2024-25, Staff Analytical Notes from Bank of Canada

Abstract: This note analyzes mortgage stress tests, a macroprudential tool. We find that when mortgage stress tests are applied to all mortgage purchase originations, they improve credit quality and reduce credit and house price growth. They also improve the resilience of borrowers to financial shocks, such as the large increase in interest rates during 2022–23.

Keywords: Credit and credit aggregates; Financial institutions; Financial system regulation and policies; Monetary policy (search for similar items in EconPapers)
JEL-codes: E5 E52 G2 G21 G28 G5 G50 G51 (search for similar items in EconPapers)
Date: 2024-11
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fle, nep-mon and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:bca:bocsan:24-25

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