The impact of housing markets on consumer debt: Credit report evidence from 1999 to 2012

Meta Brown; Sarah Stein; Basit Zafar

doi:10.1111/jmcb.12198

The impact of housing markets on consumer debt: Credit report evidence from 1999 to 2012

Meta Brown, Sarah Stein, Basit Zafar

Research output: Contribution to journal › Article › peer-review

25 Scopus citations

Abstract

We estimate the response of consumer debt portfolios to pronounced housing market swings from 1999 to 2012 using Equifax-sourced credit report data and a variety of identification approaches. We find: (i) the extraordinary climb in home equity debt from 2002 to 2006 is an expression of a stable, longer-term relationship between house price growth and home equity borrowing; (ii) all preboom homeowners, and older and prime postboom homeowners, demonstrate near dollar-for-dollar substitution between (expensive) credit card and (cheap) home equity debt in response to home equity changes; and (iii) little evidence of substitution between home equity and student loan debt.

Original language	English (US)
Pages (from-to)	175-213
Number of pages	39
Journal	Journal of Money, Credit and Banking
Volume	47
Issue number	S1
DOIs	https://doi.org/10.1111/jmcb.12198
State	Published - Mar 1 2015
Externally published	Yes

Keywords

Consumer finance
Housing
Student loans

ASJC Scopus subject areas

Accounting
Finance
Economics and Econometrics

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10.1111/jmcb.12198

Cite this

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abstract = "We estimate the response of consumer debt portfolios to pronounced housing market swings from 1999 to 2012 using Equifax-sourced credit report data and a variety of identification approaches. We find: (i) the extraordinary climb in home equity debt from 2002 to 2006 is an expression of a stable, longer-term relationship between house price growth and home equity borrowing; (ii) all preboom homeowners, and older and prime postboom homeowners, demonstrate near dollar-for-dollar substitution between (expensive) credit card and (cheap) home equity debt in response to home equity changes; and (iii) little evidence of substitution between home equity and student loan debt.",

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AB - We estimate the response of consumer debt portfolios to pronounced housing market swings from 1999 to 2012 using Equifax-sourced credit report data and a variety of identification approaches. We find: (i) the extraordinary climb in home equity debt from 2002 to 2006 is an expression of a stable, longer-term relationship between house price growth and home equity borrowing; (ii) all preboom homeowners, and older and prime postboom homeowners, demonstrate near dollar-for-dollar substitution between (expensive) credit card and (cheap) home equity debt in response to home equity changes; and (iii) little evidence of substitution between home equity and student loan debt.

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The impact of housing markets on consumer debt: Credit report evidence from 1999 to 2012

Abstract

Keywords

ASJC Scopus subject areas

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