The causal effect of house prices on mortgage demand and mortgage supply

Arbeitspapier

We identify the causal effect of house prices on mortgage demand and supply in Switzerland by exploiting exogenous shocks to immigration and thereby to house prices. Detailed micro data allow us to observe multiple offers for each mortgage request. We find a 1% increase in house prices to raise the requested mortgage amount by 0.52%. Due to positive feedback effects, the entire partial correlation is 0.78%. While we find higher house prices to increase mortgage demand, they induce banks to make fewer offers and charge higher rates, especially later in the boom and especially for highly leveraged households.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 140

Classification and Topics

• Classification: Wirtschaft ; Household Saving; Personal Finance ; Banks; Depository Institutions; Micro Finance Institutions; Mortgages ; Geographic Labor Mobility; Immigrant Workers ; Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
• Subject: House Prices ; Mortgage Demand ; Mortgage Supply ; Instrumental Variables

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Basten, Christoph ; Koch, Cathérine
• Event: Veröffentlichung
• (who): University of Zurich, Department of Economics
• (where): Zurich
• (when): 2014

Further information

• DOI: doi:10.5167/uzh-93275
• Handle: http://hdl.handle.net/10419/111197
• Last update: 10.03.2025, 11:45 AM CET