Do Loan-To-Value and Debt-To-Income Limits Work? Evidence From Korea

With another real estate boom-bust bringing woes to the world economy, a quest for a better policy toolkit to deal with these boom-busts has begun. Macroprudential measures could be in such a toolkit. Yet, we know very little about their impact. This paper takes a step to fill this gap by analyzing the Korean experience with these measures. We find that loan-to-value and debt-to-income limits are associated with a decline in house price appreciation and transaction activity. Furthermore, the limits alter expectations, which play a key role in bubble dynamics.
Publication date: December 2011
ISBN: 9781463927837
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Economics- Macroeconomics , Economics / General , International - Economics , mortgage , real estate , housing finance , mortgage market , mortgage loan , mortgage loans , residential real estate , housing markets , mortgage markets , mortgages , real estate market , real estate markets , mortgage debt , housing policy , mortgage credit , mortgage lending , prope

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