DEMAND FOR RESIDENTIAL MORTGAGE LOANS AND HOUSE PRICES IN THE EURO AREA

This paper explores the determinants of demand for residential mortgage loans in the euro area, with a focus on the house prices–demand for loans nexus. We firstly identify the demand for residential mortgage loans and then empirically assess a model for an unbalanced panel of 13 euro area countries...

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Bibliographic Details
Published inEconomics & sociology Vol. 13; no. 1; pp. 40 - 51
Main Author Dajcman, Silvo
Format Journal Article
LanguageEnglish
Published Centre of Sociological Research 01.01.2020
Fundacja Centrum Badań Socjologicznych
Centre of Sociological Research, Szczecin, Poland
Subjects
Economic policy
EU-Accession / EU-DEvelopment
Financial Markets
Fiscal Politics / Budgeting
house prices
interest rates
mortgage loans
subprime crisis
mortgage loans
subprime crisis
house prices
interest rates
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Summary:This paper explores the determinants of demand for residential mortgage loans in the euro area, with a focus on the house prices–demand for loans nexus. We firstly identify the demand for residential mortgage loans and then empirically assess a model for an unbalanced panel of 13 euro area countries, covering the period 2003Q1–2016Q3. Our results show that the growth of house prices is positively associated with changes in demand for residential mortgage loans. A positive association was also found between GDP growth and changes in demand for mortgage loans. Growth in residential mortgage interest rates and changes in bank credit standards for residential mortgage loans are negatively associated with changes in demand for residential mortgage loans. We found that these associations generally became more significant after the start of the subprime mortgage crisis in the U.S. rather than before the crisis.
ISSN:2071-789X
2306-3459
DOI:10.14254/2071-789X.2020/13-1/3