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Housing markets and economic growth: lessons from the US refinancing boom

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  • Akash Deep
  • Dietrich Domanski

Abstract

Household spending remained unexpectedly strong in the OECD area during the 2001 downturn. One explanation is that it was supported by rising real estate values and declining mortgage rates, mainly in the English-speaking countries. Such resilience was particularly remarkable for the United States, where overall household wealth declined because of falling equity prices. The US mortgage market appears to have played a significant role in this strength. There was a wave of mortgage refinancing in 2001 that was unique in both its nature and magnitude. This special feature discusses the effect of mortgage refinancing during the 2001 slowdown and the role played by changes in the structure of the market for housing finance.

Suggested Citation

  • Akash Deep & Dietrich Domanski, 2002. "Housing markets and economic growth: lessons from the US refinancing boom," BIS Quarterly Review, Bank for International Settlements, September.
    • Handle: RePEc:bis:bisqtr:0209e
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    References listed on IDEAS

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    1. Study group on fixed income markets, 2001. "The changing shape of fixed income markets," BIS Papers chapters, in: Bank for International Settlements (ed.), The changing shape of fixed income markets: a collection of studies by central bank economists, volume 5, pages 1-43, Bank for International Settlements.
    2. Bennett, Paul & Peach, Richard & Peristiani, Stavros, 2001. "Structural Change in the Mortgage Market and the Propensity to Refinance," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(4), pages 955-975, November.
    3. Kosuke Aoki & James Proudman & Gertjan Vlieghe, 2002. "Houses as collateral: has the link between house prices and consumption in the U.K. changed?," Economic Policy Review, Federal Reserve Bank of New York, vol. 8(May), pages 163-177.
    4. Capozza, Dennis R. & Seguin, Paul J., 1996. "Expectations, efficiency, and euphoria in the housing market," Regional Science and Urban Economics, Elsevier, vol. 26(3-4), pages 369-386, June.
    5. the Study group on fixed income markets, 2001. "The changing shape of fixed income markets," BIS Working Papers 104, Bank for International Settlements.
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    Cited by:

    1. Antonio, Paradiso, 2010. "Long-term interest rates, asset prices, and personal saving ratio: Evidence from the 1990s," MPRA Paper 26754, University Library of Munich, Germany.
    2. Haibin Zhu, 2005. "The importance of property markets for monetary policy and financial stability," BIS Papers chapters, in: Bank for International Settlements (ed.), Real estate indicators and financial stability, volume 21, pages 9-29, Bank for International Settlements.
    3. Ebner, André, 2013. "A micro view on home equity withdrawal and its determinants: Evidence from Dutch households," Journal of Housing Economics, Elsevier, vol. 22(4), pages 321-337.
    4. Michael F. Lovenheim, 2011. "The Effect of Liquid Housing Wealth on College Enrollment," Journal of Labor Economics, University of Chicago Press, vol. 29(4), pages 741-771.
    5. William B English, 2002. "Interest rate risk and bank net interest margins," BIS Quarterly Review, Bank for International Settlements, December.
    6. Ray Forrest & James Lee, 2004. "Cohort Effects, Differential Accumulation and Hong Kong's Volatile Housing Market," Urban Studies, Urban Studies Journal Limited, vol. 41(11), pages 2181-2196, October.
    7. Kingsley E. Dogah & Hao Lan & Sheng Zhao & Boqiang Lin, 2024. "Does Declining Air Pollution Levels Always Signal Higher Premium for Housing Market?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(11), pages 2967-2992, November.

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