Do Changes in Mortgage Credit Constraints Explain the Housing Boom and Bust?

Andra C. Ghent

Community Development Publications and Reports, 2018, 58 pages

Abstract: This paper documents patterns in US mortgage debt and home ownership in recent decades and explores how well changes in mortgage credit constraints can explain these changes. The age-adjusted home ownership rate declined slightly between 2000 and 2007, but the real stock of residential mortgage debt doubled. Since 2007, age-adjusted home ownership rates have trended down significantly as has the real stock of residential mortgage debt. The paper builds an equilibrium life-cycle model of tenure and mortgage choice that shows that a relaxation of the Loan-to-Value (LTV) constraint increases the homeownership rate for young, high-income households.

Keywords: household debt; family finances; household financial stability (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:fip:l00101:103214

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