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Mortgage credit growth for lower-income borrowers during the 2000s housing boom: Evidence and implications

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  • Rojas, Alejandro

Abstract

I examine the relationship between mortgage credit and borrower income from 1993 to 2009. I find that the relationship was positive throughout this period. However, it became significantly flatter (i.e. less positive) from 1998 to 2006, implying that growth in mortgage credit was most substantial for lower-income borrowers during this time. The evidence suggests that a disproportionate share of credit growth during the boom accrued to borrowers that previously would have had the most limited access to mortgage credit. This is consistent with the view that the housing crisis of the mid-2000s was precipitated by a dramatic expansion in the supply, or availability, of mortgage credit and that this expansion began as early as the late 1990s.

Suggested Citation

  • Rojas, Alejandro, 2021. "Mortgage credit growth for lower-income borrowers during the 2000s housing boom: Evidence and implications," Journal of Empirical Finance, Elsevier, vol. 62(C), pages 220-233.
    • Handle: RePEc:eee:empfin:v:62:y:2021:i:c:p:220-233
    DOI: 10.1016/j.jempfin.2021.04.002
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    1. Zhang, Lili & Yang, Dexiang & Guo, Yunfei, 2023. "Dual circulation development model and credit growth," Finance Research Letters, Elsevier, vol. 55(PA).

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    More about this item

    Keywords

    Mortgage; Credit; Crisis; Supply; Boom; Bust;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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