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Effects of a Mortgage Interest Rate Subsidy: Evidence from Colombia

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  • Marc Hofstetter

    ()

  • Jorge Tovar

    ()

  • Miguel Urrutia

    ()

Abstract

Government intervention in the construction sector as a way to boost the economy hasbeen a constant in Colombia for the past 90 years. This paper explicitly tests the impact of the most recent of such interventions: a subsidy to the mortgage interest rate. Our results show that the subsidy boosted mortgage loans by around 38 percent. However, we also find that real interest rates went up by 1.09 percent, i.e., there has been an incomplete pass through of the subsidy to the consumer. We estimate the pass-through of such intervention to be in the range of 65 percent to 74 percent.

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File URL: http://economia.uniandes.edu.co/publicaciones/dcede2011-20.pdf
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Bibliographic Info

Paper provided by UNIVERSIDAD DE LOS ANDES-CEDE in its series DOCUMENTOS CEDE with number 008749.

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Length: 38
Date of creation: 09 May 2011
Date of revision:
Handle: RePEc:col:000089:008749

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Keywords: Mortgage loans; mortgage interest rate subsidy; history of mortgage loans in Colombia.;

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Cited by:
  1. Juan Esteban Carranza, 2011. "La indexación de los saldos hipotecarios y la crisis colombiana de final de siglo XX," REVISTA DESARROLLO Y SOCIEDAD, UNIVERSIDAD DE LOS ANDES-CEDE.

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