scholarly journals Interest rate and housing market: MS-VAR approach

2021 ◽  
Vol 6 (1) ◽  
pp. 5-22
Author(s):  
Youngsoo Lee
Keyword(s):  
Interest Rate ◽  
Housing Market

scholarly journals Analysis of Housing Market Dynamics Considering the Structural Characteristics of Mortgage Interest

2021 ◽  
Vol 13 (19) ◽  
pp. 10523
Author(s):  
Insoo Baek ◽  
Sanghyo Lee ◽  
Joosung Lee ◽  
Jaejun Kim
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Housing Market ◽  
Structural Characteristics ◽  
Housing Demand ◽  
Market Mechanism ◽  
Policy Implications ◽  
Mortgage Loan ◽  
Market Mechanisms ◽  
The Government

Mortgage loan interest rates consists of base interest and spread. In general, the base interest is adjusted by the government for the sustainability of the housing market. On the other hand, spread is determined by market mechanisms. Accordingly, the change pattern of base interest and spread may appear differently depending on the market situation. In the end, the effect of the government’s market intervention through interest rate policy may be different than expected. In this respect, the purpose of this paper is to analyze the effects of base interest and spread of the mortgage loan interest rate on the housing market and to derive important policy implications for the sustainability of the housing market. As a result of this study, the ineffectiveness of the government’s interest rate policies on the stability of the housing market was confirmed. The market mechanisms had more significant effects on the sustainability of the housing market than artificial political intervention. Further, housing supply policies based on the market mechanism could be more effective than housing demand policies based on interest-rate adjustments.

scholarly journals LIBOR and interest rate spread: sensitivities of the Australian housing market

2019 ◽  
Vol 25 (1) ◽  
pp. 73-99 ◽  
Author(s):  
Martin Hinch ◽  
Michael McCord ◽  
Stanley McGreal
Keyword(s):  
Interest Rate ◽  
Housing Market ◽  
Interest Rate Spread

scholarly journals International Real Estate Review

2017 ◽  
Vol 20 (3) ◽  
pp. 375-396
Author(s):  
Gary Wai Chung Wong ◽  
◽  
Lok Sang Ho ◽  
Keyword(s):  
Interest Rate ◽  
Housing Market ◽  
Supply And Demand ◽  
Housing Prices ◽  
Housing Price ◽  
Price Expectations ◽  
Price Expectation ◽  
Long Run ◽  
Property Price ◽  
Explicit Consideration

This paper builds on the literature that shows policy often plays a key role in housing cycles. Using the cointegration approach which focuses on the supply and demand dynamics of the housing market, and with explicit consideration of housing price expectations proxied by the price-earning ratio in financial markets, this paper identifies two cointegrating relations: a long run demand-side relation that involves housing property price, interest rate, price expectation and income; and a supply-side relation that involves private housing completion, property price, interest rate, and building and land costs. Based on Hong Kong data from 1990 a£á¡§ 2012, which covers big cycles in the housing market, this paper suggests that policies to augment or restrain housing supply in the attempt to stabilize housing prices have been counterproductive.

scholarly journals What Role Does the Housing Market Play for the Macroeconomic Transmission Mechanism?

2020 ◽  
Vol 13 (6) ◽  
pp. 112
Author(s):  
Mats Wilhelmsson
Keyword(s):  
Interest Rate ◽  
Housing Market ◽  
Housing Prices ◽  
Bank Lending ◽  
Transmission Mechanism ◽  
Bank Lending Channel ◽  
Lending Channel ◽  
The Interest Rate ◽  
The Impact ◽  
Over Time

The main objective is to answer the question: What role does the housing market play for the transmission mechanism and (in particular) is the impact constant over time? The research question also includes analyzing the importance of the housing market for the transmission mechanism. We estimate an eight-variable structural vector autoregression (SVAR) model of the Swedish economy over the period 1993 and 2018 using quarterly data, covering both the internet bubble in 2000 and the financial crises in 2008. The results indicate that interest rates have both a direct effect on housing prices and an indirect impact through the bank lending channel. Over time, the traditional interest rate channel importance has been stable. On the other hand, the role of the bank lending channel has increased over time. Household debt has increased substantially in Sweden and elsewhere. That means that the interest rate sensitivity in society has increased. Based on the results, it is possible to evaluate and forecast potential house price effects (both direct and indirect) when the interest rate changes.

HAS MONETARY POLICY CAUSED HOUSING PRICES TO RISE OR FALL IN CHINA?

2018 ◽  
pp. 1-18 ◽  
Author(s):  
XIAO-CUI YIN ◽  
CHI-WEI SU ◽  
RAN TAO
Keyword(s):  
Monetary Policy ◽  
Interest Rate ◽  
Housing Market ◽  
Money Supply ◽  
Asset Price ◽  
Housing Prices ◽  
User Cost ◽  
Rate System ◽  
Short Run ◽  
The Impact

This paper examines whether broader money supply (M2) and interest rate as two monetary policy tools may have differently affected housing prices in China. Empirical results show that there is a co-movement between housing prices and M2 in the short run and it becomes more pronounced after 2006 in the medium run. In addition, generally M2 positively affects housing prices. This supports the asset price channel which indicates that an easing monetary policy offers ample liquidity and results in raising the housing prices. The excess liquidity after 2008 spread to housing market, resulting in too much money chasing relatively few assets and triggering a surge in housing prices. On the other hand, we observe that co-movement between housing prices and interest rate is not very evident in most time. Moreover, we find that interest rate has a positive effect on housing prices which is not consistent with the user cost approach and indicates that a contracting monetary policy is not effective in curbing housing market. Not completely liberalized interest rate system and the high return on housing investments reduce the impact of interest rate on housing prices. These findings indicate that money supply is more effective than interest rate as channel to control the housing prices in China. The results are helpful for the scientific formulation of monetary policy for reasonable regulation of the market.

scholarly journals Policy-Driven Boom and Bust in the Housing Market: Evidence from Mongolia

2021 ◽  
Vol 38 (02) ◽  
pp. 279-317
Author(s):  
GAN-OCHIR DOOJAV ◽  
DAVAASUKH DAMDINJAV
Keyword(s):  
Interest Rate ◽  
Housing Market ◽  
Income Elasticity ◽  
Housing Price ◽  
Mortgage Market ◽  
Mortgage Loans ◽  
Mortgage Interest ◽  
Housing Boom ◽  
Mortgage Interest Rate ◽  
Housing Price Dynamics

This paper examines the effects of a mortgage interest rate subsidy on booms and busts in the housing market by analyzing the Housing Mortgage program in Mongolia. We find that the most recent housing boom in Mongolia occurred from the second quarter (Q2) of 2012 to first quarter (Q1) of 2014, and that the subsequent housing bust lasted 4 years. Both house-specific factors and macroeconomic variables had a significant influence on housing price dynamics. Mortgage interest rate semielasticity and real household income elasticity were estimated as −3 and 1.4, respectively. Dynamic analysis of the estimated vector error correction models suggests that the country’s policy intervention in the mortgage market—introducing an interest rate subsidy on mortgage loans for residential properties of up to 80 square meters—drove the recent housing boom in Mongolia.

scholarly journals Time-Varying Housing Market Fluctuations: Evidence from the U.S. Housing Market

2020 ◽  
Vol 28 (2) ◽  
pp. 89-99
Author(s):  
Dicle Ozdemir
Keyword(s):  
Interest Rate ◽  
Housing Market ◽  
Transition Probabilities ◽  
Transition Probability ◽  
High Growth ◽  
Credit Market ◽  
Switching Behavior ◽  
Time Varying ◽  
Modeling Framework ◽  
Growth Regime

AbstractThe objective of this paper is to investigate how the housing market and credit market factors contribute to US business and interest rate cycles in a time-varying transition probability modeling framework. The Markov switching results appear to exhibit periods of low-growth regime and highgrowth regime for both house and credit markets. The study also shows that the transition probabilities reflecting the regime switching behavior of business and interest rate cycles vary over time as functions of the house and credit market. We find that both the housing market and credit market contribute to whether the economy remains in a high-growth regime or moves into lowgrowth regime, and whether the interest rates remain in a low or high-growth regime. The results show that the housing market plays a leading role in affecting the time-varying probabilities between regimes for the business and interest rate cycles.

scholarly journals HOUSING MARKETS, EXPECTATION FORMATION AND INTEREST RATES

2020 ◽  
pp. 1-42
Author(s):  
Carolin Martin ◽  
Noemi Schmitt ◽  
Frank Westerhoff
Keyword(s):  
Interest Rate ◽  
Interest Rates ◽  
Housing Market ◽  
House Prices ◽  
Housing Markets ◽  
Central Banks ◽  
Market Model ◽  
Expectation Formation ◽  
The Interest Rate ◽  
Stock Flow

Based on a behavioral stock-flow housing market model in which the expectation formation behavior of boundedly rational and heterogeneous investors may generate endogenous boom-bust cycles, we explore whether central banks can stabilize housing markets via the interest rate. Using a mix of analytical and numerical tools, we find that the ability of central banks to tame housing markets by increasing the base (target) interest rate, thereby softening the demand pressure on house prices, is rather limited. However, central banks can greatly improve the stability of housing markets by dynamically adjusting the interest rate with respect to mispricing in the housing market.

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