Automated Underwriting and Housing Market Dynamics

Stephanie Johnson and Nitzan Tzur-Ilan

No 2506, Working Papers from Federal Reserve Bank of Dallas

Abstract: We study how the 1990s adoption of now widely-used automated mortgage underwriting systems affected credit supply, house prices and their comovement across locations. The effects go well beyond processing improvements. By implementing more complex, statistically-informed lending rules, the systems allowed households to borrow more, pushing up house prices. Furthermore, by transmitting a common set of credit standards across lenders, the new technology increased credit and house price synchronization. Together, our results illustrate how new lending technology can generate correlated credit supply shocks, contributing to house price booms and increasing market interconnectedness.

Keywords: mortgage credit; financial technology; automated underwriting; housing prices; credit supply; house price comovement (search for similar items in EconPapers)
JEL-codes: G21 L85 R21 R31 (search for similar items in EconPapers)
Pages: 66
Date: 2025-01-17, Revised 2025-12-23
New Economics Papers: this item is included in nep-his, nep-mac, nep-pay and nep-ure
Note: An earlier draft of this paper circulated under the title "Financial Technology and the 1990s Housing Boom."
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.dallasfed.org/~/media/documents/research/papers/2025/wp2506r1.pdf Full text (application/pdf)

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:fip:feddwp:99619

Ordering information: This working paper can be ordered from

DOI: 10.24149/wp2506r1

Access Statistics for this paper

More papers in Working Papers from Federal Reserve Bank of Dallas Contact information at EDIRC.
Bibliographic data for series maintained by Amy Chapman ().