Effects of a Mortgage Interest Rate Subsidy: Evidence from Colombia

Marc Hofstetter, Jorge Tovar and Miguel Urrutia

No 3106, IDB Publications (Working Papers) from Inter-American Development Bank

Abstract: Government intervention in the construction sector as a way to boost the economy has been a constant in Colombia for the past 90 years. This paper explicitly tests the impact of the most recent of such interventions: a subsidy to the mortgage interest rate. The results show that the subsidy boosted mortgage loans by around 38 percent. However, it is also found that real interest rates went up by 09 percent, i.e., there has been an incomplete pass-through of the subsidy to the consumer. The pass-through of this instance of intervention is estimated to be in the range of 65 percent to 74 percent.

Keywords: IDB-WP-257; Mortgage loans; Mortgage interest rate subsidy; History of mortgage loans in Colombia (search for similar items in EconPapers)
JEL-codes: N96 R21 R28 (search for similar items in EconPapers)
Date: 2011-05
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Effects of a Mortgage Interest Rate Subsidy: Evidence from Colombia (2011)
Working Paper: Effects of a Mortgage Interest Rate Subsidy: Evidence from Colombia (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:3106

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