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The Impact of Housing Markets on Consumer Debt: Credit Report Evidence from 1999 to 2012

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  • META BROWN
  • SARAH STEIN
  • BASIT ZAFAR

Abstract

We estimate the response of consumer debt portfolios to pronounced housing market swings from 1999 to 2012 using Equifax‐sourced credit report data and a variety of identification approaches. We find: (i) the extraordinary climb in home equity debt from 2002 to 2006 is an expression of a stable, longer‐term relationship between house price growth and home equity borrowing; (ii) all preboom homeowners, and older and prime postboom homeowners, demonstrate near dollar‐for‐dollar substitution between (expensive) credit card and (cheap) home equity debt in response to home equity changes; and (iii) little evidence of substitution between home equity and student loan debt.

Suggested Citation

  • Meta Brown & Sarah Stein & Basit Zafar, 2015. "The Impact of Housing Markets on Consumer Debt: Credit Report Evidence from 1999 to 2012," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(S1), pages 175-213, March.
    • Handle: RePEc:wly:jmoncb:v:47:y:2015:i:s1:p:175-213
    DOI: 10.1111/jmcb.12198
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    Cited by:

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    2. Li, Jieying & Zhang, Xin, 2017. "House Prices, Home Equity, and Personal Debt Composition," Working Paper Series 343, Sveriges Riksbank (Central Bank of Sweden).
    3. Collins, J. Michael & Hembre, Erik & Urban, Carly, 2020. "Exploring the rise of mortgage borrowing among older Americans," Regional Science and Urban Economics, Elsevier, vol. 83(C).
    4. Pancrazi, Roberto & Pietrunti, Mario, 2019. "Natural expectations and home equity extraction," Journal of Housing Economics, Elsevier, vol. 46(C).
    5. N. Meltem Daysal & Michael F. Lovenheim & David N. Wasser, 2023. "The Intergenerational Transmission of Housing Wealth," CESifo Working Paper Series 10647, CESifo.
    6. Daysal, N. Meltem & Lovenheim, Michael & Siersbæk, Nikolaj & Wasser, David N., 2021. "Home prices, fertility, and early-life health outcomes," Journal of Public Economics, Elsevier, vol. 198(C).
    7. Brett A. Mccully & Karen M. Pence & Daniel J. Vine, 2019. "How Much Are Car Purchases Driven by Home Equity Withdrawal?," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 51(5), pages 1403-1426, August.
    8. Ono, Arito & Uchida, Hirofumi & Udell, Gregory F. & Uesugi, Iichiro, 2021. "Lending pro-cyclicality and macroprudential policy: Evidence from Japanese LTV ratios," Journal of Financial Stability, Elsevier, vol. 53(C).
    9. Mueller, Holger & Yannelis, Constantine, 2017. "Students in Distress: Labor Market Shocks, Student Loan Default, and Federal Insurance Programs," CEPR Discussion Papers 11938, C.E.P.R. Discussion Papers.
    10. Stephanie Moulton & Donald Haurin & Samuel Dodini & Maximilian D. Schmeiser, 2016. "How Home Equity Extraction and Reverse Mortgages Affect the Credit Outcomes of Senior Households," Working Papers wp351, University of Michigan, Michigan Retirement Research Center.
    11. Don Schlagenhauf & Carlos Garriga, 2017. "Identifying "Default Thresholds" in Consumer Liabilities Using High Frequency Data," 2017 Meeting Papers 1305, Society for Economic Dynamics.
    12. Scott Fulford & Joanna Stavins, 2022. "Does getting a mortgage affect consumer credit use?," Review of Economics of the Household, Springer, vol. 20(3), pages 955-991, September.
    13. Grant Graziani & Wilbert van der Klaauw & Basit Zafar, 2016. "Workers' Spending Response to the 2011 Payroll Tax Cuts," American Economic Journal: Economic Policy, American Economic Association, vol. 8(4), pages 124-159, November.
    14. Scott L. Fulford & Scott Schuh, 2023. "Revolving versus Convenience Use of Credit Cards: Evidence from U.S. Credit Bureau Data," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 55(7), pages 1667-1701, October.
    15. Bleemer, Zachary & Brown, Meta & Lee, Donghoon & Strair, Katherine & van der Klaauw, Wilbert, 2021. "Echoes of rising tuition in students’ borrowing, educational attainment, and homeownership in post-recession America," Journal of Urban Economics, Elsevier, vol. 122(C).
    16. Marianna Brunetti & Costanza Torricelli, 2017. "Second homes in Italy: every household’s dream or (un)profitable investments?," Housing Studies, Taylor & Francis Journals, vol. 32(2), pages 168-185, February.
    17. Li, Yongjia & Tahsin, Salman, 2021. "Home price appreciation and residential lending standards," Journal of Economics and Business, Elsevier, vol. 114(C).
    18. Tahsin, Salman, 2022. "Home price growth and minority access to mortgage credit," Journal of Economics and Business, Elsevier, vol. 120(C).
    19. Reint Gropp & John Krainer & Elizabeth Laderman, 2014. "Did Consumers Want Less Debt? Consumer Credit Demand Versus Supply in the Wake of the 2008-2009 Financial Crisis," Working Paper Series 2014-8, Federal Reserve Bank of San Francisco.
    20. Rabah Arezki & Thorsten Beck & Robert Deyoung & John V. Duca & Prakash Loungani & Anthony Murphy, 2015. "Conference on Housing, Stability, and the Macroeconomy: International Perspectives," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(S1), pages 1-11, March.

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