House prices and the allocation of consumer credit

Mingzhu Tai

Real Estate Economics, 2025, vol. 53, issue 4, 869-899

Abstract: While housing market booms improve homeowners' credit access, they could constrain credit availability to renters. Using individual‐level consume credit data, I show that renters have poorer credit access if they live in locations where lenders are more exposed to housing booms and extend more mortgage lending to homeowners across the country. This suggests a reallocation of credit from renters to homeowners. As a result, renters end up using more expensive alternative credit, default more, and also experience lower consumption. This reallocation of credit during the boom also affect renters' financial well‐being in the subsequent bust.

Date: 2025
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