The Czech National Bank has published a working paper examining how tighter borrower-based mortgage limits affect access to new mortgages across the income distribution. Using household-level data from the Household Finance and Consumption Survey and hand-collected information on policy actions in 17 European countries from 2008 to 2019, the study finds that tighter loan-to-value and debt-service-to-income limits do not affect all households equally and are associated with a sharper reduction in first-mortgage access for middle-income households. Following tightening, middle-income households were about 2 percentage points less likely than households in the top income decile to obtain a first mortgage on their main residence. The result is driven mainly by tighter loan-to-value limits. Among middle-income households, the differential effect is stronger for younger households, which the paper links to lower accumulated savings and housing equity.
Czech National Bank working paper finds tighter mortgage borrower limits hit middle income first time buyers harder
The Czech National Bank published a working paper finding that tighter borrower-based mortgage limits reduce first-mortgage access more for middle-income households than for top-income households. Across 17 European countries over 2008 to 2019, middle-income households were about 2 percentage points less likely to obtain a first mortgage after tightening. The effect was driven mainly by loan-to-value limits and was stronger for younger middle-income households.