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  4. February 2022
  5. The Effects of Mortgage Credit Availability: Evidence from Minimum Credit Score Lending Rules

The Effects of Mortgage Credit Availability: Evidence from Minimum Credit Score Lending Rules

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Abstract

This paper uses changes in mortgage lenders' minimum credit score thresholds to credibly identify the effects of access to household credit. Falling under these thresholds has very large negative effects on borrowing for up to two years, and these effects fail to reverse within four years. The effects are particularly concentrated among individuals who have relatively high credit demand and face relatively large contractions in credit supply. In addition, access to new mortgage credit reduces delinquency on nonmortgage debt and appears to spill over to demand for auto loans.

Citation

Laufer, Steven, and Andrew Paciorek. 2022. "The Effects of Mortgage Credit Availability: Evidence from Minimum Credit Score Lending Rules." American Economic Journal: Economic Policy, 14 (1): 240-76. DOI: 10.1257/pol.20180229

Additional Materials

JEL Classification

  • G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
  • G51 Household Finance: Household Saving, Borrowing, Debt, and Wealth
  • R21 Urban, Rural, Regional, Real Estate, and Transportation Economics: Housing Demand
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