Skip to main content

Please enter a keyword and click the arrow to search the site

Monetary policy and the mortgage market : new evidence from loan-level data



Publishing details

2016 Under revision

Authors / Editors

Ferreira C

Publication Year



Using data on more than 5,000,000 individual mortgages issued in the UK from 1981q1 until 2007q4, I first provide novel evidence on the evolution and behavior of the mortgage market as characterized by the leverage and afford- ability positions of households when mortgages are originated. I then exploit within-mortgagors variation to analyze the role of mortgagors balance sheets in the transmission of monetary policy. Estimates point in the direction of significant mortgagor heterogeneity in two dimensions: (i) in the response of observed leverage (loan-to-value) and affordability (loan-to-income) ratios at the time of origination for the median mortgagor, and (ii) the response of LTVs for households that are first-time-buyers and those that are non-first-time-buyers. I then use a standard general equilibrium model with collateral constraints and endogenous housing tenure decisions to argue that the estimated empirical responses of LTVs and LTIs are likely to be robust to the theoretical asymmetry arising from positive and negative shocks when a mortgagor is at or around the leverage constraint. The main reason for this is the small size of the shock estimated from the data relative to average observed interest rates and leverage.


Mortgage market; First-time-buyer; Monetary policy

Available on ECCH


Select up to 4 programmes to compare

Select one more to compare
subscribe_image_desktop 5949B9BFE33243D782D1C7A17E3345D0

Sign up to receive our latest news and business thinking direct to your inbox


Sign up to receive our latest course information and business thinking

Leave your details above if you would like to receive emails containing the latest thought leadership, invitations to events and news about courses that could enhance your career. If you would prefer not to receive our emails, you can still access the case study by clicking the button below. You can opt-out of receiving our emails at any time by visiting: or by unsubscribing through the link provided in our emails. View our Privacy Policy for more information on your rights.