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The Effects of Mortgage Credit Availability: Evidence from Minimum Credit Score Lending Rules

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  • Steven Laufer
  • Andrew Paciorek

Abstract

This paper uses changes in mortgage lenders' minimum credit score thresholds to credibly identify the effects of access to household credit. Falling under these thresholds has very large negative effects on borrowing for up to two years, and these effects fail to reverse within four years. The effects are particularly concentrated among individuals who have relatively high credit demand and face relatively large contractions in credit supply. In addition, access to new mortgage credit reduces delinquency on nonmortgage debt and appears to spill over to demand for auto loans.

Suggested Citation

  • Steven Laufer & Andrew Paciorek, 2022. "The Effects of Mortgage Credit Availability: Evidence from Minimum Credit Score Lending Rules," American Economic Journal: Economic Policy, American Economic Association, vol. 14(1), pages 240-276, February.
    • Handle: RePEc:aea:aejpol:v:14:y:2022:i:1:p:240-76
    DOI: 10.1257/pol.20180229
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    More about this item

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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