BoE paper highlights link between mortgage limits and consumption
Authors find “new link” between down payment requirements and household consumption
Research published by the Bank of England sheds new light on how constraints on mortgage borrowing impact consumption, adding to a growing body of evidence on links between the financial sector and real economy.
The working paper, by Belinda Tracey and Neeltje van Horen, explores how the relaxation of constraints on down payments for houses affects consumption.
“We show that relaxing the down payment constraint positively affects household consumption in addition to stimulating housing market
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