Economics at your fingertips  

Low Mortgage Rates and Securitization: A Distinct Perspective on the US Housing Boom

Helmut Herwartz and Fang Xu ()

Scandinavian Journal of Economics, 2020, vol. 122, issue 1, 164-190

Abstract: In this paper, we analyse the impacts of low interest rates and lax underwriting standards on the US housing boom around the beginning of the new millennium. We suggest a time‐varying mean of the log price‐to‐rent ratio (PtR) to capture the persistent changes in housing prices. We show that the increasing latent trend in the PtR was significantly affected by the increased securitization of residential mortgage loans and decreasing interest rates, with the former effect being about three times larger than the latter. In the absence of securitization, negative interest rates would have been needed to reproduce an equally large housing boom since 2003.

Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0347-0520

Access Statistics for this article

Scandinavian Journal of Economics is currently edited by Richard Friberg, Matti Liski and Kjetil Storesletten

More articles in Scandinavian Journal of Economics from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2021-05-12
Handle: RePEc:bla:scandj:v:122:y:2020:i:1:p:164-190