SMU SOE Seminar (September 7, 2022):Impacts of LTV Policy on the Mortgage Market via Housing Speculation

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ABSTRACT Using China's loosening of loan-to-value (LTV) policy for secondary houses during 2014Q4-2016Q3 as a unique experiment and the administrative data of more than 3 million mortgage originations, we study how LTV policy for secondary houses influences housing and mortgage markets. We find, empirically, that this policy change fueled a housing boom by encouraging mortgage demand for primary homes, especially by the middle-aged high-income households. We develop a theoretical model to show that such a policy has a quantitatively large impact on house prices and mortgage loan originations on primary homes via existing homeowners' trading up for housing speculation. Click here to view the CV. Click here to view the paper.
		PRESENTER Kaiji Chen Emory University
		RESEARCH FIELDS Macroeconomics Financial Economics Chinese Economy
		DATE: 7 September 2022 (Wednesday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1 School of Economics Level 5 Singapore Management University 90 Stamford Road Singapore 178903