Does innovation in residential mortgage products explain rising house prices? No.

de Silva, Ashton J and Boymal, Jonathan and Potts, Jason and Thomas, Stuart (2015): Does innovation in residential mortgage products explain rising house prices? No.

Abstract

Like many consumer products, household mortgages have experienced significant innovation in recent decades, with mortgages becoming cheaper, more accessible, and with more features. Many observers have expected that this would increase demand for houses, contributing to a rise in house prices. We investigate this relation, both in terms the extent and timing of innovation in residential mortgage products, and then we critically assess whether there is a link with Melbourne Metropolitan house prices (post 1980). Our conclusion is surprising: we find no apparent evidence of a relationship between residential mortgage innovation and house prices.

• Item Type: MPRA Paper
• Language: English
• Keywords: Home Mortgage, Financial Innovation, House Prices,
• Subjects: E - Macroeconomics and Monetary Economics > E6 - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook > E69 - Other; G - Financial Economics > G1 - General Financial Markets > G18 - Government Policy and Regulation; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R31 - Housing Supply and Markets

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