Residential real estate (RRE) lending standards: determinants and financial stability implications

Giorgia De Nora, Elena Durante, Adele Fontana, Marco Forletta, Gregorio Ghetti, Barbara Jarmulska, Cristian Perales and Valerio Scalone

Macroprudential Bulletin, 2025, vol. 29

Abstract: This article looks into residential real estate (RRE) lending standards, focusing on their key determinants and assessing the implications of loose lending standards for financial stability and the real economy. Two key insights emerge. First, lending standards tend to be procyclical – i.e., they become looser during economic upturns and tighter during downturns. Second, loose lending standards amplify the effects of negative housing market shocks on the real economy and heighten financial stability risks via an increase in the probability of default of households. JEL Classification: E44, G01, G21, R31

Keywords: Residential real estate lending standards; financial stability; real economy; procyclicality (search for similar items in EconPapers)
Date: 2025-06
Note: 2648466
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