How Resilient Is Mortgage Credit Supply? Evidence from the COVID-19 Pandemic

Andreas Fuster, Aurel Hizmo, Lauren Lambie-Hanson, James Vickery () and Paul Willen

No 28843, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We study the resilience of US mortgage credit supply during the COVID-19 pandemic—the most significant shock since the financial crisis—and draw out broader lessons about the functioning of this important market. While mortgage lending boomed in 2020-21, we find that a sharp increase in intermediation markups limited the passthrough of low rates to households. We link this increase in markups to capacity constraints amplified by pandemic-related operational and labor market frictions. We also present new evidence that capacity constraints in the mortgage market are national in scope and have not yet been significantly mitigated by recent technological change. Nonbank lenders, often thought to be fragile, gained market share from banks but remain reliant on securitization. We also find evidence that government credit guarantees support the flow of credit to risky borrowers but are not always sufficient, and that quantitative easing boosts supply particularly for the types of loans being purchased.

JEL-codes: G21 G23 G28 (search for similar items in EconPapers)
Date: 2021-05
New Economics Papers: this item is included in nep-ure
Note: AP CF EFG ME
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Citations: View citations in EconPapers (16)

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Working Paper: How Resilient is Mortgage Credit Supply? Evidence from the Covid-19 Pandemic (2021)
Working Paper: How Resilient Is Mortgage Credit Supply? Evidence from the COVID-19 Pandemic (2021)
Working Paper: How Resilient Is Mortgage Credit Supply? Evidence from the COVID-19 Pandemic (2021)
Working Paper: How Resilient Is Mortgage Credit Supply? Evidence from the COVID-19 Pandemic (2021)
Working Paper: How Resilient Is Mortgage Credit Supply? Evidence from the COVID-19 Pandemic (2021)
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