@techreport{AhlfeldtSzumiloTripathy, type = {Working Paper}, author = {Ahlfeldt, Gabriel M. and Szumilo, Nikodem and Tripathy, Jagdish}, title = {Housing-consumption channel of mortgage demand}, series = {Berlin School of Economics Discussion Papers}, journal = {Berlin School of Economics Discussion Papers}, edition = {No. 44}, doi = {10.48462/opus4-5572}, url = {http://nbn-resolving.de/urn:nbn:de:kobv:b1570-opus4-55725}, pages = {57}, abstract = {We quantify the housing-consumption channel in mortgage demand according to which households borrow more following house-price increases since housing and non-housing consumption are imperfect substitutes. To identify this channel, we take a structural approach to mortgage demand and supply, exploiting exogenous variation in house-price growth and a unique dataset with matched transaction- price and mortgage information. We estimate an elasticity of mortgage borrowing to house-prices of 0.82. Counterfactual analysis of the general-equilibrium of housing and mortgage markets shows that, sans housing-consumption channel, mortgage and house-price growth in the UK would have been 50\% and 31\% lower, respectively, since the 1990s.}, language = {en} }