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Credit constraints and the redistribution of housing wealth

Author

Listed:
  • Belinda Tracey

    (Bank of England)

  • Neeltje van Horen

    (University of Amsterdam and Centre for Economic Policy Research)

Abstract

We examine how easing mortgage borrowing constraints affects entry into homeownership. Using administrative mortgage data and cross‑district exposure to the UK Help‑to‑Buy program, which reopened the 95% loan-to-value segment in 2013, we show that first‑time buyer purchases rose sharply in more exposed areas. Introducing a new proxy for financial support – based on the gap between observed and predicted down payments – we find that gains were concentrated among households unlikely to have relied on transfers, suggesting a weaker role for family wealth in enabling homeownership. Because these buyers tend to have higher incomes, the composition of homeowners shifted toward higher‑income households.

Suggested Citation

  • Belinda Tracey & Neeltje van Horen, 2025. "Credit constraints and the redistribution of housing wealth," Bank of England Staff Working Paper series 1147, Bank of England.
    • Handle: RePEc:boe:boeewp:023269
    as

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    References listed on IDEAS

    as
    1. François Ortalo-Magné & Sven Rady, 2006. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints ," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(2), pages 459-485.
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    More about this item

    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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