Judge Dread: court severity, repossession risk and demand in mortgage and housing markets

Piero Montebruno, Olmo Silva and Nikodem Szumilo

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study the impact of borrower protection on mortgage and housing demand using variation in the likelihood that houses are repossessed coming from heterogeneity in preferences of local judges. We develop a framework that provides conditions to identify the impact of repossession risk on housing and credit demand, holding supply fixed. Empirically, we exploit exogenous variation in risk created by boundaries of court catchment areas. We find that a one-standard-deviation decrease in borrower protection decreases borrowing and house prices by 4.5%.

Keywords: house repossessions; mortgages; house prices; housing demand; mortgage default (search for similar items in EconPapers)
JEL-codes: G21 R21 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2025-07-31
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Published in The Economic Journal, 31, July, 2025, 135(669), pp. 1677 - 1710. ISSN: 0013-0133

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http://eprints.lse.ac.uk/127298/ Open access version. (application/pdf)

Related works:
Working Paper: Judge Dread: court severity, repossession risk and demand in mortgage and housing markets (2021)
Working Paper: Judge Dread: court severity, repossession risk and demand in mortgage and housing markets (2021)
Working Paper: Judge Dread: court severity, repossession risk and demand in mortgage and housing markets (2021)
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