Simulating the impact of borrower-based macroprudential policies on mortgages and the real estate sector in Austria – evidence from the Household Finance and Consumption Survey 2014

Nicolas Albacete and Peter Lindner

Financial Stability Report, 2017, issue 33, 52-68

Abstract: In this paper we simulate the impact on house prices and credit available of different macroprudential restrictions on household mortgages in Austria. We apply the methodology developed in the literature for credit register-based information and extend it to the use of survey data. This allows us to make use of the data gleaned from the most recent wave of the Household Finance and Consumption Survey (HFCS) in Austria to investigate the linkages between macroprudential policy and credit supply. We find that of the three standard credit ratio-based criteria – loan to value (LTV), debt to income (DTI) and debt service to income (DSTI) – for most households, the income-based criteria (DTI followed by DSTI) are the binding ones, while the role of LTV is limited. The relationship between credit supply and house prices is found to be positive, but weak. We simulate various macroprudential scenarios and find that macroprudential measures may potentially have sizeable effects on the credit available to households for financing real estate. Furthermore, it can be seen that – as expected – macroprudential policy tends to affect less affluent mortgage holders (although at the median, mortgage holders are more affluent than the general household population). The results also show that the simulated macroprudential policy measures trigger smaller changes of house prices.

Keywords: macroprudential policy; house price development; mortgage market; HFCS (search for similar items in EconPapers)
JEL-codes: D12 D14 G21 G28 R21 R31 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (8)

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Chapter: Simulating impacts of borrower based macroprudential policies on mortgages and the real estate sector in Austria – evidence from the Household Finance and Consumption Survey 2014 (2017)
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