English, Article, Journal or magazine article edition: The Impact of Interest-rate Subsidies on Long-term Household Debt: Evidence from a Large Program Nuno C. Martins; Ernesto Villanueva

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Bookmark: http://trove.nla.gov.au/version/153557
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • The impact of interest-rate subsidies on long-term household debt: evidence from a large program
Author
  • Nuno C. Martins
  • Ernesto Villanueva
Physical Description
  • preprint
Notes
  • The responsiveness of long-term household debt to the interest rate is a crucial parameter for assessing the effectiveness of public policies aimed at promoting specific types of saving. This paper estimates the effect of a reform of Credito Bonificado, a large program in Portugal that subsidized mortgage interest rates, on long-term household debt. The reform established a ceiling in the price of the house that could be financed through the program, and provides plausibly exogenous variation in incentives. Using a unique dataset of matched household survey data and administrative records of debt, we document a large decrease in the probability of signing a new loan after the removal of the subsidy.
  • Consumer borrowing, subsidies, quasi-natural experiment
  • RePEc:upf:upfgen:713
  • The responsiveness of long-term household debt to the interest rate is a crucial parameter for assessing the effectiveness of public policies aimed at promoting specific types of saving. This paper estimates the effect of a reform of a large program that subsidized mortgage interest rates on long-term household debt. The reform established a ceiling in the price of the house that could be Þnanced through the program, and provides plau- sibly exogenous variation in incentives. Using a unique dataset of matched household survey data and administrative records of debt, we document that loss of access to the subsidy decreased the probability of signing a new loan.
  • Consumer Borrowing; Mortgage interest rate subsidies; Quasi-natural
  • RePEc:dnb:dnbwpp:026
Language
  • English
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