Economics & Sociology

ISSN: 2071-789X eISSN: 2306-3459 DOI: 10.14254/2071-789X
Index PUBMS: f5512f57-a601-11e7-8f0e-080027f4daa0
Article information
Title: Demand for residential mortgage loans and house prices in the euro area
Issue: Vol. 13, No 1, 2020
Published date: 03-2020 (print) / 03-2020 (online)
Journal: Economics & Sociology
ISSN: 2071-789X, eISSN: 2306-3459
Authors: Silvo Dajcman
University of Maribor, Maribor, Slovenia
Keywords: mortgage loans, house prices, interest rates, subprime crisis
DOI: 10.14254/2071-789X.2020/13-1/3
Index PUBMS: e29ac4f8-78be-11ea-a0f3-fa163e0fa1a0
Language: English
Pages: 40-51 (12)
JEL classification: E14, G21

This paper explores the determinants of demand for residential mortgage loans in the euro area, with a focus on the house prices–demand for loans nexus. We firstly identify the demand for residential mortgage loans and then empirically assess a model for an unbalanced panel of 13 euro area countries, covering the period 2003Q1–2016Q3. Our results show that the growth of house prices is positively associated with changes in demand for residential mortgage loans. A positive association was also found between GDP growth and changes in demand for mortgage loans. Growth in residential mortgage interest rates and changes in bank credit standards for residential mortgage loans are negatively associated with changes in demand for residential mortgage loans. We found that these associations generally became more significant after the start of the subprime mortgage crisis in the U.S. rather than before the crisis.


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