Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/216797 
Year of Publication: 
2019
Series/Report no.: 
Economic Working Paper Series No. 1682
Publisher: 
Universitat Pompeu Fabra (upf), Department of Economics and Business, Barcelona
Abstract: 
We analyze the effects of borrower-based macroprudential policy at the household-level. For identification, we exploit administrative Dutch tax-return and property ownership data linked to the universe of housing transactions, and the introduction of a mortgage loan-to-value limit. The regulation reduces mortgage leverage, with bunching in its limit. Ex-ante more-affected households substantially reduce overall leverage and debt servicing costs but consume 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. All of these effects are stronger for liquidity-constrained households.
Subjects: 
macroprudential policy
residential mortgages
solvency vs. liquidity tradeoff
household leverage
loan-to-valud ratio
JEL: 
E21
E58
G21
G28
G51
Document Type: 
Working Paper

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