LTV ratio more effective than DTS in Canada – BIS paper
Paper examines effect of recent macro-prudential policies targeting the housing market
Macro-prudential policies targeting the loan-to-value (LTV) ratio have had a larger impact on housing demand than those that target the debt-to-service ratio, according to a working paper published by the Bank for International Settlements (BIS).
In their paper, Bank of Canada economists Jason Allen, Timothy Grieder, Brian Peterson and Tom Roberts compare loan level data with that of household survey data in a “microsimulation model” of mortgage demand of first time homebuyers to understand the
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