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Working Paper
Technological innovation in mortgage underwriting and the growth in credit, 1985–2015
Foote, Christopher L.; Loewenstein, Lara; Willen, Paul S. (2019-11-01)
The application of information technology to finance, or ?fintech,? is expected to revolutionize many aspects of borrowing and lending in the future, but technology has been reshaping consumer and mortgage lending for many years. During the 1990s, computerization allowed mortgage lenders to reduce loan-processing times and largely replace human-based assessments of credit risk with default predictions generated by sophisticated empirical models. Debt-to-income ratios at origination add little to the predictive power of these models, so the new automated underwriting systems allowed higher ...
Working Papers , Paper 19-11

Working Paper
Mortgages and monetary policy
Kydland, Finn E.; Šustek, Roman; Garriga, Carlos (2013)
Mortgages are long-term nominal loans. Under incomplete asset markets, monetary policy is shown to affect housing investment and the economy through the cost of new mortgage borrowing and the value of payments on outstanding debt. These channels, distinct from traditional transmission of monetary policy, are evaluated within a general equilibrium model. Persistent monetary policy shocks, resembling the level factor in the nominal yield curve, have larger effects than transitory shocks, manifesting themselves as long-short spread. The transmission is stronger under adjustable- than fixed-rate ...
Working Papers , Paper 2013-37

Working Paper
Rural Affordable Rental Housing : Quantifying Need, Reviewing Recent Federal Support, and Assessing the Use of Low Income Housing Tax Credits in Rural Areas
Dumont, Andrew M. (2018-11-14)
Recently, there has been significant interest in the high levels of rental cost burden being experienced across the United States. Much of this scholarship has focused on rental cost burdens in larger urban areas, or at the national level, and has not explored differences in the prevalence of rental cost burden in urban versus rural communities. In this paper, I find that rental cost burdens are a challenge facing both urban and rural communities. However, despite the need for affordable rental housing in rural communities identified, I find the amount of resources made available by the ...
Finance and Economics Discussion Series , Paper 2018-077

Working Paper
Beliefs, Aggregate Risk, and the U.S. Housing Boom
Jacobson, Margaret M. (2022-09-23)
Endogenously optimistic beliefs about future house prices can account for the path and standard deviation of house prices in the U.S. housing boom of the 2000s. In a general equilibrium model with incomplete markets and aggregate risk, agents form beliefs about future house prices in response to shocks to fundamentals. In an income expansion with looser credit conditions, agents are more likely to underpredict house prices and revise up their beliefs. Matching the standard deviation and steady rise in house prices results in homeownership becoming less affordable later in the boom as well as ...
Finance and Economics Discussion Series , Paper 2022-061

Working Paper
Automated Underwriting and Housing Market Dynamics
Johnson, Stephanie; Tzur-Ilan, Nitzan (2025-12-23)
We study how the 1990s adoption of now widely-used automated mortgage underwriting systems affected credit supply, house prices and their comovement across locations. The effects go well beyond processing improvements. By implementing more complex, statistically-informed lending rules, the systems allowed households to borrow more, pushing up house prices. Furthermore, by transmitting a common set of credit standards across lenders, the new technology increased credit and house price synchronization. Together, our results illustrate how new lending technology can generate correlated credit ...
Working Papers , Paper 2506

Working Paper
Efficiency in Housing Markets: Do Home Buyers Know how to Discount?
Hjalmarsson, Erik; Hjalmarsson, Randi (2006)
We test for efficiency in the market for Swedish co-ops by examining the negative relationship between the sales price and the present value of future monthly payments or `rents'. If the co-op housing market is efficient, the present value of co-op rental payments due to underlying debt obligations of the cooperative should be fully reflected in the sales price. However, we find that, on average, a one hundred kronor increase in the present value of future rents only leads to an approximately 75 kronor reduction in the sales price; co-ops with higher rents are thus relatively overpriced ...
International Finance Discussion Papers , Paper 879

Newsletter
Higher Home Prices and Higher Rates Mean Bigger Affordability Hurdles for the U.S. Consumer
Gillet, Max; Hull, Cindy E. (2023-08)
In the U.S., homeownership is often described as part of the “American dream,” a way for consumers to accumulate wealth and gain other economic benefits. Almost two out of three U.S. households own the home they live in, a relatively stable amount over the last decade. Buying a home is usually the largest investment that a consumer will make, and the purchase price usually far exceeds what most can afford out of their current savings. In 2022, roughly 70% of home purchases were made with the help of mortgage financing.
Chicago Fed Letter , Volume no 481

Newsletter
What is driving the differences in inflation across U.S. regions?
McGranahan, Leslie; Gupta, Elainia (2023-05)
In this article, we explore differences in inflation dynamics across U.S. regions. Looking independently at the impact of consumption patterns and inflation by expenditure categories, we find that recent gaps across regions have existed largely because of different regional inflation rates for the housing category. Yet we also find that overall inflation is very highly correlated across regions.
Chicago Fed Letter , Volume no 478 , Pages 8

Working Paper
Technological Innovation in Mortgage Underwriting and the Growth in Credit: 1985-2015
Foote, Christopher L.; Loewenstein, Lara; Willen, Paul S. (2018-12-07)
The application of information technology to finance, or ?fintech,? is expected to revolutionize many aspects of borrowing and lending in the future, but technology has been reshaping consumer and mortgage lending for many years. During the 1990s computerization allowed mortgage lenders to reduce loan-processing times and largely replace human-based assessment of credit risk with default predictions generated by sophisticated empirical models. Debt-to-income ratios at origination add little to the predictive power of these models, so the new automated underwriting systems allowed higher ...
Working Papers (Old Series) , Paper 1816

Working Paper
Housing Choices and Their Implications for Consumption Heterogeneity
De Francisco, Eva (2019-05-29)
International Finance Discussion Papers , Paper 1249

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