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Borrower-Based Measures, House Prices and Household Debt

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  • Francesco Caloia

Abstract

This paper investigates the direct effect on household debt of macroprudential borrowerbased measures, namely Loan to Income (LTI) and Loan to Value (LTV) limits. The analysis focuses on the Netherlands, in a period characterized by growing vulnerabilities from the housing market and changes in the macroprudential policy. Results show that a LTI limit targeting debt repayment capacity is only binding at the left tail of the income distribution. Instead, a progressive tightening of the LTV limit that did not impose any downpayment constraint doubled the share of LTV-constrained borrowers. Results also show the role of increasing house prices as additional binding constraints for household borrowing choices.

Suggested Citation

  • Francesco Caloia, 2022. "Borrower-Based Measures, House Prices and Household Debt," Working Papers 738, DNB.
    • Handle: RePEc:dnb:dnbwpp:738
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    File URL: https://www.dnb.nl/media/jd2kn22b/working_paper_no-_738.pdf
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    Cited by:

    1. Kukk, Merike & Levenko, Natalia, 2024. "Measuring the effects of borrower-based policies on new housing loans," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 666-684.
    2. Saha, Asish & Rooj, Debasis & Sengupta, Reshmi, 2023. "Macroprudential Policy and mortgage leverage decisions—Evidence from micro data," Economic Analysis and Policy, Elsevier, vol. 80(C), pages 1430-1444.
    3. Francesco Caloia & David-Jan Jansen & Kees van Ginkel, 2023. "Floods and financial stability: Scenario-based evidence from below sea level," Working Papers 796, DNB.

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    More about this item

    Keywords

    Borrower based measures; macroprudential policy; LTV; LTI; DSTI;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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