Working Paper

Measuring Mortgage Credit Availability : A Frontier Estimation Approach


Abstract: We construct a new measure of mortgage credit availability that describes the maximum amount obtainable by a borrower of given characteristics. We estimate this "loan frontier" using mortgage originations data from 2001 to 2014 and show that it reflects a binding borrowing constraint. Our estimates reveal that the expansion of mortgage credit during the housing boom was substantial for all borrowers, not only for low-score or low-income borrowers. The contraction was most pronounced for low-score borrowers. Using variation in the frontier across metropolitan areas over time, we show that borrowing constraints played an important role in the recent housing cycle.

Keywords: Constraints; Construction; Credit Availability; Frontier; House prices; Mortgages;

JEL Classification: G21; R21; R31; D12; G10; R20;

https://doi.org/10.17016/FEDS.2017.101

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Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2017-09-29

Number: 2017-101