Mortgage Rate and the Choice of Mortgage Length: Quasi-experimental Evidence from Chinese Transaction-level Data
AbstractUtilizing a large transaction-level dataset on housing mortgages in China, this study estimates the effect of the mortgage rate spread between long- and short-term loans on property purchasersâ€™ choice of loan length. Our identification of the causal effect of this spread on loan length hinges on a unique institutional feature of China, that is, its â€œdual-trackâ€ mortgage scheme. We observe two types of mortgagors in this setting: â€œnormalâ€ mortgagors who face floating mortgage rates spread and â€œspecial mortgagorsâ€ who are entitled to a fixed mortgage rate spread. Using the latter as a comparison group to address the confounding effects of omitted factors, we find that the change in interest rates significantly affects the mortgage decisions of normal mortgagors. When the prime mortgage rate spread increases by 10 basis points, the likelihood of such a mortgagor choosing a shortterm loan increases by 8.4 percent.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by BBVA Bank, Economic Research Department in its series Working Papers with number 1202.
Length: 12 pages
Date of creation: Jan 2012
Date of revision:
Mortgage rates; Loan decision; Quasi-experiment; China housing market;
Find related papers by JEL classification:
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-04-10 (All new papers)
- NEP-BAN-2012-04-10 (Banking)
- NEP-URE-2012-04-10 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Angel de la Fuente & José E. Boscá, 2011.
"Gasto educativo por regiones y niveles en 2005,"
UFAE and IAE Working Papers
873.11, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- Adolfo Albo & Juan Luis Ordaz Diaz, 2011. "Migracion y cambio climatico.El caso mexicano," Working Papers 1127, BBVA Bank, Economic Research Department.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (MARIA VICTORIA ESCOLAR POLO).
If references are entirely missing, you can add them using this form.