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Lower interest rates don’t necessarily improve housing affordability
The direct impact of higher mortgage rates on housing affordability has received much attention. We emphasize that housing affordability not only depends on mortgage rates but also on house prices, which have competing effects.
Discussion Paper
How and Why Do Consumers Use “Buy Now, Pay Later”?
In a previous post, we highlighted that financially fragile households are disproportionately likely to use “buy now, pay later” (BNPL) payment plans. In this post, we shed further light on BNPL’s place in its users’ household finances, with a particular focus on how use varies by a household’s level of financial fragility. Our results reveal substantially different use patterns, as more-fragile households tend to use the service to make frequent, relatively small, purchases that they might have trouble affording otherwise. In contrast, financially stable households tend to not use ...
Report
Determinants of mortgage default and consumer credit use: the effects of foreclosure laws and foreclosure delays
The mortgage default decision is part of a complex household credit management problem. We examine how factors affecting mortgage default spill over to other credit markets. As home equity turns negative, homeowners default on mortgages and HELOCs at higher rates, whereas they prioritize repaying credit cards and auto loans. Larger unused credit card limits intensify the preservation of credit cards over housing debt. Although mortgage non-recourse statutes increase default on all types of housing debt, they reduce credit card defaults. Foreclosure delays increase default rates for both ...
Journal Article
Bankers, regulators absorb lessons of Silicon Valley Bank failure as new tests emerge
Ben Munyan, director of supervisory policy in the Banking Supervision Department at the Federal Reserve Bank of Dallas, discusses the challenges the banking industry faces in an era of rapidly rising interest rates and how Texas institutions have fared.
COVID-era eviction moratoriums improved financial well-being...while they lasted
This analysis leverages new eviction and credit data from Dallas County, Texas, to explore the impact of the moratoriums and to examine trends that surfaced once the moratoriums ended.
Journal Article
Texas’ cheap housing edge slipping away as resilient demand outpaces supply
Housing affordability has declined in Texas, a top destination for domestic and international migrants drawn by its historically low cost of living.
Working Paper
The Racial Wealth Gap, Financial Aid, and College Access
We examine how the racial wealth gap interacts with financial aid in American higher education to generate a disparate impact on college access and outcomes. Retirement savings and home equity are excluded from the formula used to estimate the amount a family can afford to pay. All else equal, omitting those assets mechanically increases the financial aid available to families that hold them. White families are more likely to own those assets and in larger amounts. We document this issue and explore its relationship with observed differences in college attendance, types of institutions ...
Journal Article
Price Dispersion When Stores Sell Multiple Goods
A notable feature of most markets is that firms are multiproduct, in the sense that they offer for sale more than one single type of good. In this paper, I discuss a recent paper, Kaplan et al. (2016), that explores both empirically and theoretically price dispersion in a multiproduct setting. I discuss, with some detail, their empirical strategy and main empirical findings: a big part of price dispersion for a good in an area comes from stores with the same overall price level pricing individual goods in persistently different ways. I then go over the simple model proposed by the authors ...
Report
Bad credit, no problem? Credit and labor market consequences of bad credit reports
Credit reports are used in nearly all consumer lending decisions and, increasingly, in hiring decisions in the labor market, but the impact of a bad credit report is largely unknown. We study the effects of credit reports on financial and labor market outcomes using a difference-in-differences research design that compares changes in outcomes over time for Chapter 13 filers, whose personal bankruptcy flags are removed from credit reports after seven years, to changes for Chapter 7 filers, whose personal bankruptcy flags are removed from credit reports after ten years. Using credit bureau ...
Inflation stress and concern remain elevated despite stabilizing prices
Despite consumer price inflation falling considerably since peaking in 2022, household inflation-related stress and concern remain elevated, having dropped only slightly.