The real consequences of bank mortgage lending standards

Cindy M. Vojtech, Benjamin S. Kay and John Driscoll

Journal of Financial Intermediation, 2020, vol. 44, issue C

Abstract: We examine the real effects of changes in bank mortgage loan underwriting standards by combining responses to the Federal Reserve’s Senior Loan Officer Opinion Survey, application information from the Home Mortgage Disclosure Act, and local housing market measures over 1990 to 2013. Tightened standards are associated with a 1 percentage point increase in denial rates and a 5% fall in loan issuance, controlling for applicant pool changes, but no change for predominantly-securitizing banks. In areas with more exposure to banks that have tightened standards, mortgage delinquency rates, house prices, new home sales, and residential construction employment fall substantially.

Keywords: Residential real estate; Denial rates; Credit availability (search for similar items in EconPapers)
JEL-codes: E02 E51 G21 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (6)

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Working Paper: The Real Consequences of Bank Mortgage Lending Standards (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinin:v:44:y:2020:i:c:s1042957319300622

DOI: 10.1016/j.jfi.2019.100846

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