Credit supply and the housing boom

Alejandro Justiniano, Giorgio Primiceri and Andrea Tambalotti

No 709, Staff Reports from Federal Reserve Bank of New York

Abstract: The housing boom that preceded the Great Recession was the result of an increase in credit supply driven by looser lending constraints in the mortgage market. This view on the fundamental drivers of the boom is consistent with four empirical observations: the unprecedented rise in home prices, the surge in household debt, the stability of debt relative to home values, and the fall in mortgage rates. These facts are difficult to reconcile with the popular view that attributes the housing boom to looser borrowing constraints associated with lower collateral requirements. In fact, a slackening of collateral constraints at the peak of the lending cycle triggers a fall in home prices in our framework, providing a novel perspective on the possible origins of the bust.

Keywords: collateral constraints; house prices; housing and credit boom; leverage restrictions (search for similar items in EconPapers)
JEL-codes: E32 E44 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2015-02-01
New Economics Papers: this item is included in nep-ban, nep-dge, nep-mac and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (30)

Downloads: (external link)
https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr709.pdf Full text (application/pdf)

Related works:
Journal Article: Credit Supply and the Housing Boom (2019)
Working Paper: Credit Supply and the Housing Boom (2015)
Working Paper: Credit Supply and the Housing Boom (2015)
Working Paper: Credit Supply and the Housing Boom (2015)
Working Paper: Credit Supply and the Housing Boom (2014)
Working Paper: Credit Supply and the Housing Boom (2014)
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:fednsr:709

Ordering information: This working paper can be ordered from

Access Statistics for this paper

More papers in Staff Reports from Federal Reserve Bank of New York Contact information at EDIRC.
Bibliographic data for series maintained by Gabriella Bucciarelli ().