Credit and Housing Price Effects of Automated Underwriting Adoption

Stephanie Johnson and Nitzan Tzur-Ilan

No 2506, Working Papers from Federal Reserve Bank of Dallas

Abstract: We study how the 1990s adoption of now widely-used automated mortgage underwriting systems affected credit, house prices and their comovement across locations. The effects go well beyond processing improvements. By implementing more complex, statistically-informed lending rules, the systems allowed households to borrow more, pushing up house prices. Furthermore, by transmitting a common set of credit standards across lenders, the new technology increased house price synchronization. Together, our results illustrate how new lending technology can generate systematic credit supply shocks, influencing house prices and increasing market interconnectedness.

Keywords: mortgage credit; financial technology; automated underwriting; housing prices; credit supply; house price comovement (search for similar items in EconPapers)
JEL-codes: G21 L85 R21 R31 (search for similar items in EconPapers)
Pages: 82
Date: 2025-01-17, Revised 2026-05-04
New Economics Papers: this item is included in nep-his, nep-mac, nep-pay and nep-ure
Note: Previous versions of this paper circulated under the titles "Financial Technology and the 1990s Housing Boom" and "Automated Underwriting and Housing Market Dynamics."
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Persistent link: https://EconPapers.repec.org/RePEc:fip:feddwp:99619

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DOI: 10.24149/wp2506r2

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