Collateral value uncertainty and mortgage credit provision

Erica Xuewei Jiang and Anthony Lee Zhang

Journal of Financial Economics, 2025, vol. 169, issue C

Abstract: Houses with higher value uncertainty receive less mortgage credit: mortgages backed by these houses are more likely to be rejected, have higher interest rates, and have lower loan-to-price ratios. The relationship between house value uncertainty and credit availability is driven partly by a classic channel in which uncertainty lowers debt recovery rates, and partly by a novel channel where more uncertain appraisals make regulatory constraints on loan size more likely to bind. We build a structural model to quantify the effects of each channel, and show how a shift toward computerized asset appraisals could influence credit access.

Keywords: Collateral; Mortgages; Price dispersion; Appraisals (search for similar items in EconPapers)
JEL-codes: G2 G5 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0304405X25000625
Full text for ScienceDirect subscribers only

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: https://EconPapers.repec.org/RePEc:eee:jfinec:v:169:y:2025:i:c:s0304405x25000625

DOI: 10.1016/j.jfineco.2025.104054

Access Statistics for this article

Journal of Financial Economics is currently edited by G. William Schwert

More articles in Journal of Financial Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().