Cost of Credit and House Prices
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Title: |
Cost of Credit and House Prices |
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Number: |
21/06 |
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Author(s): |
Yusuf Emre Akgündüz, H. Özlem Dursun-de Neef, Yavuz Selim Hacıhasanoğlu, Fatih Yılmaz |
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Language: |
English |
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Date: |
March 2021 |
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Abstract: |
This paper studies the relationship between house prices and financing conditions. In the analysis, it exploits a sudden reduction in the mortgage rates of state-owned banks in Turkey during the summer of 2020 as an exogenous shock to provide causal estimates of the cost of credit on house prices. The effects are estimated using a detailed dataset on all house sales with mortgages. Our results show that a 1 percentage point decrease in annual interest rates raised house prices by 2.1%. This impact is driven by a corresponding increase in individual mortgage loans of 6.6%. |
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Keywords: |
Mortgage rates, Mortgage lending, House prices |
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JEL Codes: |
G21; G28 |
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