Does innovation in residential mortgage products explain rising house prices? No

Ashton de Silva, Jonathan Boymal, Jason Potts and Stuart Thomas

MPRA Paper from University Library of Munich, Germany

Abstract: Like many consumer products, household mortgages have experienced significant innovation in recent decades, with mortgages becoming cheaper, more accessible, and with more features. Many observers have expected that this would increase demand for houses, contributing to a rise in house prices. We investigate this relation, both in terms the extent and timing of innovation in residential mortgage products, and then we critically assess whether there is a link with Melbourne Metropolitan house prices (post 1980). Our conclusion is surprising: we find no apparent evidence of a relationship between residential mortgage innovation and house prices.

Keywords: Home Mortgage; Financial Innovation; House Prices (search for similar items in EconPapers)
JEL-codes: E69 G18 R31 (search for similar items in EconPapers)
Date: 2015-01-30
New Economics Papers: this item is included in nep-ino and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:62548

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