Homeownership and Mortgage Access
Saturday, Jan. 4, 2020 2:30 PM - 4:30 PM (PDT)
- Chair: Paul Willen, Federal Reserve Bank of Boston
Credit Supply and Homeownership
AbstractThe question of what determines home ownership has been extensively researched in the literature. This paper contributes to the literature by studying the effect of banking deregulation on the likelihood of renters becoming homeowners. We find that renters who experienced both inter-state and intra-state banking deregulations are 8.7 percentage points more likely to become homeowners than other renters, all else being
equal. In addition, the impact is larger on households with low income and high debt-to-income ratios. Our estimated impacts are larger than those estimated from state-level data, suggesting that the heterogeneous effects among households are important towards home ownership. Our findings are robust to potential sample selection bias and functional misspecifications.
Interest-Only Mortgages and Consumption Growth: Evidence from a Mortgage Market Reform
AbstractWe use detailed household-level data from Denmark to analyze how the introduction of interest-only mortgages affected consumption expenditure and borrowing. Four years after the reform interest-only mortgages constituted 40 percent of outstanding mortgage debt. Using an ex-ante measure of exposure motivated by financial constraints, we show households who are more likely to use an IO mortgage, increased consumption substantially following the reform. The increase in consumption is driven by borrowing at the time of refinancing and by borrowers with lower pre-reform leverage ratios. Our results show changes in the mortgage contract can have large impacts on consumption expenditure.
Endowments and Minority Homeownership
AbstractFifty years after the adoption of the 1968 Fair Housing Act that prohibits discrimination in the housing market, homeownership rates have not increased for Black or Hispanic households. The current homeownership rate for Black households is 42 percent, identical to the 1970 Census-reported level, and 48 percent for Hispanic households, lower than the 1970 level. Using data from the 1989, 2005, and 2013 American Housing Surveys, we identify the extent to which group differences in household endowments account for persistently low minority homeownership levels.
- R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location
- G2 - Financial Institutions and Services