Liquidity constraints and demand for maturity the case of mortgages

Alessandro Ferrari and Marco Loseto

No 2859, Working Paper Series from European Central Bank

Abstract: Using administrative data on mortgages issued in Italy between 2018 and 2019,this paper estimates loan demand elasticities to maturity and interest rate. We findthat households are responsive to both contract terms: a 1% decrease in interestrate increases the average loan size by 0.22% whereas a commensurable increasein maturity increases loan demand by 0.30%. This evidence suggests that creditconstraints are relevant in this market. Things change substantially when movingalong the distribution of contract maturities: short term borrowers are unresponsive to their contract lengthwhile maturity elasticities are higher for long term borrowers. JEL Classification: D12, D14, D15, G11, G51

Keywords: credit demand; household finance; maturity; mortgage (search for similar items in EconPapers)
Date: 2023-10
New Economics Papers: this item is included in nep-ban, nep-mac and nep-ure
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ecb:ecbwps:20232859

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