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45 posts on "Housing"

February 22, 2016

Whither Mortgages?



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Our most recent Quarterly Report on Household Debt and Credit showed that although total household debt has increased somewhat since 2012, that growth has been driven almost entirely by nonhousing debt—credit cards, auto loans and student loans. The largest category of household debt—mortgages—has been essentially flat since 2012, in spite of a substantial rise in housing prices over that period. In this post, we explore the sources of the sluggish growth in mortgage debt using our New York Fed Consumer Credit Panel, which is based on Equifax credit data.

Continue reading "Whither Mortgages?" »

Posted by Blog Author at 7:00 AM in Household Finance, Housing | Permalink | Comments (2)

February 12, 2016

Just Released: Household Debt Grew Slowly in 2015 as Mortgage Balances Stayed Flat



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This morning, New York Fed President William Dudley spoke to the press about the growing resilience of the U.S. household sector. His speech was followed by a briefing by New York Fed economists on developments in household borrowing. Their presentation included a detailed decomposition on mortgage borrowing and payment trends, and some new research on how borrowing has evolved differently across age groups. Today, the New York Fed also released the Quarterly Report on Household Debt and Credit for the fourth quarter of 2015. The report, the press briefing , and the following analysis are all based on the New York Fed Consumer Credit Panel, which is itself based on consumer credit data from Equifax.

Continue reading "Just Released: Household Debt Grew Slowly in 2015 as Mortgage Balances Stayed Flat" »

Posted by Blog Author at 10:05 AM in Household Finance, Housing, Mortgages | Permalink | Comments (1)

February 08, 2016

Has MBS Market Liquidity Deteriorated?



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Mortgage-backed securities guaranteed by the government-backed entities Fannie Mae, Freddie Mac, and Ginnie Mae, or so-called “agency MBS,” are the primary funding source for U.S. residential housing. A significant deterioration in the liquidity of the MBS market could lead investors to demand a premium for transacting in this important market, ultimately raising borrowing costs for U.S. homeowners. This post looks for evidence of changes in agency MBS market liquidity, complementing similar posts studying liquidity in U.S. Treasury and corporate bond markets.

Continue reading "Has MBS Market Liquidity Deteriorated?" »

Posted by Blog Author at 7:02 AM in Financial Markets, Housing, Liquidity | Permalink | Comments (0)

November 05, 2015

How Did Quantitative Easing Interact with Regional Inequality?



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Income, or wealth, inequality is not something that central bankers generally worry about when setting monetary policy, the goals of which are to maintain price stability and promote full employment. Nevertheless, it is important to understand whether and how monetary policy affects inequality, and this topic has recently generated quite a bit of discussion and academic research, with some arguing that the Federal Reserve’s expansionary policy of recent years has exacerbated inequality (see, for instance, here or here), while others reach the opposite conclusion (see here or here). This disagreement can be attributed in part to the different channels through which expansionary monetary policy can affect inequality: its effect on asset prices would tend to increase inequality, while its effect on labor incomes and employment would likely decrease inequality. In this post, I study one particular channel through which Fed policies may have disparate effects—namely, mortgage refinancing—and I focus on dispersion across locations in the United States.

Continue reading "How Did Quantitative Easing Interact with Regional Inequality?" »

November 04, 2015

Differences in Rent Inflation by Cost of Housing



Update (12.9.15): We revised the chart package linked to in the second paragraph of this post to correct a spreadsheet error. A new note also clarifies our methodology. Please see the addendum below.

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We know that different people experience different inflation rates because the bundle of goods and services that they consume is different from that of the "typical" household. This phenomenon is discussed in this publication from the Bureau of Labor Statistics (BLS), and this article from the New York Fed. But did you know that there are substantial differences in inflation experience depending on the level of one's housing costs? In this post, which is based upon our updated staff report on “The Measurement of Rent Inflation,” we present evidence that price changes for rent, which comprises a large share of consumer spending, can vary considerably across households. In particular, we show that rent inflation is consistently higher for lower-cost housing units than it is for higher-cost units. Note that since owners' equivalent rent inflation is estimated from observed changes in rent of rental units, this finding applies to homeowners as well. While we cannot be certain about why this is the case, it appears to be at least partly related to how additional units are supplied to the housing market: in higher-price segments additional units primarily come from new construction, while most of the increase in lower-price segments comes from units that previously were occupied by higher-income households.

Continue reading "Differences in Rent Inflation by Cost of Housing" »

Posted by Blog Author at 2:30 PM in Housing, Inflation, Macroecon | Permalink | Comments (2)

October 15, 2015

Evaluating the Rescue of Fannie Mae and Freddie Mac



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In September 2008, the U.S. government engineered a dramatic rescue of Fannie Mae and Freddie Mac, placing the two firms into conservatorship and committing billions of taxpayer dollars to stabilize their financial position. While these actions were characterized at the time as a temporary “time out,” seven years later the firms remain in conservatorship and their ultimate fate is uncertain. In this post, we evaluate the success of the 2008 rescue on several key dimensions, drawing from our recent research article in the Journal of Economic Perspectives.

Continue reading "Evaluating the Rescue of Fannie Mae and Freddie Mac" »

Posted by Blog Author at 7:00 AM in Crisis, Financial Institutions, Housing, Mortgages | Permalink | Comments (5)

August 24, 2015

Rethinking Mortgage Design

John Campbell, Andreas Fuster, David Lucca, Stijn Van Nieuwerburgh, and James Vickery

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Because mortgages make up the majority of household debt in most developed countries, mortgage design has important implications for macroeconomic policy and household welfare. As one example, most U.S. mortgages have fixed interest rates—if interest rates fall, existing borrowers need to refinance to lower their interest payments. In practice, households are often slow to refinance, or may not be able to do so. As a result, the transmission of U.S. monetary policy is dampened relative to countries like the United Kingdom where mortgage rates on most loans adjust automatically with short-term interest rates. In this post, we discuss some of the key takeaways from a recent conference where policymakers, academics, practitioners, and other experts convened to discuss mortgage design and consider possible mortgage market innovations.

Continue reading "Rethinking Mortgage Design" »

Posted by Blog Author at 7:00 AM in Household Finance, Housing, Mortgages | Permalink | Comments (1)

August 13, 2015

Just Released: Releveraging the Consumer Credit Panel with Two New Charts



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Our Consumer Credit Panel, which is based on data from the Equifax credit reporting agency, first arrived at the New York Fed in 2009, and our very first Quarterly Report on Household Debt and Credit was published in August 2010, five years ago this month. We’ve continued to produce the same report, with very few changes, since the report’s initial release. However, with today’s release of the report for the second quarter of 2015, we’re beginning to make some changes, starting with two new charts that provide granularity on mortgage loan originations. These data are identical to the originations data that we’ve released previously, but we now report origination volume by credit score groups. The new charts’ form will be familiar to those who have seen our earlier work on auto loans or the U.S. Economy in a Snapshot, and will leverage some of the detail that we have in our dataset on new extensions of credit and underwriting standards.

Continue reading "Just Released: Releveraging the Consumer Credit Panel with Two New Charts" »

Posted by Blog Author at 11:15 AM in Household Finance, Housing | Permalink | Comments (0)

July 15, 2015

A Discussion of Thomas Piketty’s Capital in the Twenty-First Century: Does More Capital Increase Inequality?



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Second in a two-part series


My aim in the second post of this series on Thomas Piketty’s Capital in the Twenty-First Century is to talk about the economist’s research accomplishment in reconstructing capital-output ratios for developed countries from the Industrial Revolution to the present and using them to explain why wealth inequality will rise in developed countries. I will then provide a critical discussion of his interpretation of the history of capital in the developed world. Finally, I’ll end by discussing Piketty’s main policy proposal: the global tax on capital.

Continue reading "A Discussion of Thomas Piketty’s Capital in the Twenty-First Century: Does More Capital Increase Inequality?" »

Posted by Blog Author at 7:00 AM in Economic History, Housing, Inequality, Macroecon | Permalink | Comments (0)

July 08, 2015

How Sensitive Is Housing Demand to Down Payment Requirements and Mortgage Rates?



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When a household is looking to buy a home, financial considerations are usually very important. In particular, in deciding “how much house to buy,” a household must ponder how large a down payment it can make at the time of purchase, and also how much it can afford to pay each month. The minimum required down payment and the interest rate on available mortgages (which determines the monthly payment) are key elements in the decision. When these variables change, this likely affects the price a household is willing and able to pay for a home, and thus the housing market overall. However, measuring the strength of these effects is notoriously difficult. In this post, which is based on a recent staff report, we describe a novel approach to measure these effects. We find that a change in down payment requirements tends to have a large effect on housing demand—households’ willingness to pay for a given home—especially for current renters, whereas the effects of a change in the mortgage rate are modest.


Continue reading "How Sensitive Is Housing Demand to Down Payment Requirements and Mortgage Rates? " »

Posted by Blog Author at 7:00 AM in Household Finance, Housing, Inflation | Permalink | Comments (1)
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