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- Title
Adjusting to Macroprudential Policies: Loan-to-Value Limits and Housing Choice.
- Authors
Tzur-Ilan, Nitzan
- Abstract
This study provides novel evidence regarding the effects of loan-to-value (LTV) limits on housing choices. Using a detailed loan-level dataset, I exploit the introduction of LTV limits in Israel. I find that the LTV limits led borrowers to choose housing units that were more affordable, farther from the central business district, and in lower socioeconomic neighborhoods. Additionally, these LTV limits increase interest rates and decrease loan amounts. The findings of this study indicate that macroprudential policies, which focus on the stability of the financial system, have micro implications on location choices, commuting costs, and movement to less-advantaged areas.
- Subjects
ISRAEL; LOAN-to-value ratio; HOUSING; HOME prices; ECONOMIC aspects of decision making; INTEREST rates; MORTGAGE loans; NEIGHBORHOOD characteristics
- Publication
Review of Financial Studies, 2023, Vol 36, Issue 10, p3999
- ISSN
0893-9454
- Publication type
Article
- DOI
10.1093/rfs/hhad035