Home price growth and minority access to mortgage credit

Publication Date

5-1-2022

Document Type

Article

Publication Title

Journal of Economics and Business

Volume

120

DOI

10.1016/j.jeconbus.2022.106056

Abstract

This paper examines the relationship between home price growth and mortgage lending standards for minority applicants during the 2001–2006 (pre-crisis) and 2012–2017 (post-crisis) periods. Using the housing supply elasticity measure by Saiz (2010) to instrument for home price growth, I find that minorities in metropolitan areas with home price appreciation experienced looser mortgage lending standards during the pre-crisis period but tighter lending standards during the post-crisis years. Moreover, there was a greater increase in minority loan acceptance rate relative to non-minority loan acceptance rate in these areas during the pre-crisis period. The results suggest that home price appreciation improved minority access to mortgage credit through lower lending standards during the pre-crisis years.

Keywords

Home price growth, Minority borrowers, Mortgage supply, Residential lending standards, Subprime loans

Department

Accounting and Finance

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