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Mortgage credit growth for lower-income borrowers during the 2000s housing boom: Evidence and implications

Alejandro Rojas

Journal of Empirical Finance, 2021, vol. 62, issue C, 220-233

Abstract: I examine the relationship between mortgage credit and borrower income from 1993 to 2009. I find that the relationship was positive throughout this period. However, it became significantly flatter (i.e. less positive) from 1998 to 2006, implying that growth in mortgage credit was most substantial for lower-income borrowers during this time. The evidence suggests that a disproportionate share of credit growth during the boom accrued to borrowers that previously would have had the most limited access to mortgage credit. This is consistent with the view that the housing crisis of the mid-2000s was precipitated by a dramatic expansion in the supply, or availability, of mortgage credit and that this expansion began as early as the late 1990s.

Keywords: Mortgage; Credit; Crisis; Supply; Boom; Bust (search for similar items in EconPapers)
JEL-codes: G21 G28 R31 R38 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.jempfin.2021.04.002

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Journal of Empirical Finance is currently edited by R. T. Baillie, F. C. Palm, Th. J. Vermaelen and C. C. P. Wolff

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