Mortgage Finance And Consumer Credit: Implications On Financial Stability In SEACEN Economies

There is a growing concern over the rapid increase in mortgage loans and consumer credit of households in SEACEN economies in recent years. Rising household credit has important implications for the economy. Periods of excessive credit growth has often been linked with episodes of financial and macroeconomic instability. The 2009 global financial crisis, which was partly caused by excessive private sector debt, provides a key example of this observation. SEACEN recognizes the importance of this issue for its member economies. The guiding objective, therefore, of this study is to better understand the factors driving the increase in household demand for mortgage finance and consumer credit in SEACEN economies and to assess the implications of the rising trend on financial stability. The descriptive analysis and empirical exercises are undertaken with an end view of helping policy makers design initiatives and measures that will maximize the economic and welfare benefits of increased household credit while mitigating the potential vulnerabilities it could trigger in the system. This research volume is a result of collaborative efforts of SEACEN and member central banks. Chapter one is the integrative report which compares and analyses the cross regional experiences of the participating SEACEN economies prepared by the project team leader while the following chapters comprise the team project papers authored by the respective project team members from participating SEACEN member central banks. The team project papers discuss in greater detail the trends and developments in mortgage finance and consumer credit in the individual economies.