Paper #1682

Título:

Take It to the limit? The effects of household leverage caps

Autores:

Sjoerd Van Bekkum, Marc Gabarro, Rustom M. Irani y José-Luis Peydró

Fecha:

Noviembre 2019

Resumen:

We analyze the effects of borrower-based macroprudential policy at the household-level. For identification, we exploit administrative Dutch tax-return and property data linked to the universe of housing transactions, and an introduction of loan-to-value regula- tion. The regulation reduces overall household leverage, with bunching in its limit. Ex- ante more-affected households substantially reduce leverage and debt servicing costs. Rather than buying cheaper homes or taking lightly-regulated loans, households con- sume greater liquidity to satisfy the regulation. Improvements in household solvency result in less financial distress and, given negative idiosyncratic shocks, better liquidity management. However, fewer households transition from renting into ownership. These effects are stronger among liquidity-constrained households.

Palabras clave:

Macroprudential policy; financial regulation; residential mortgages; household finance; household leverage; loan-to-value ratio

Códigos JEL:

D14; D31; E21; E58; G21; G28

Área de investigación:

Macroeconomía y Economía Internacional

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