Loan-to-Value Limits and House Prices

37 Pages Posted: 30 Sep 2019

See all articles by Kasper Meisner Nielsen

Kasper Meisner Nielsen

Copenhagen Business School - Department of Finance

Date Written: September 2019


This study evaluates the effect of loan-to-value (LTV) limits on house prices. The identification strategy exploits variation in LTV limits induced by Hong Kong Monetary Authorities’ decision to introduce differentiated LTV limits anchored on the value of the property, which allows us to observe the counterfactual house price development. We estimate that a one-percentage-point decrease in LTV limits reduces the house price growth by 0.8 percentage points. Overall, our results document that macro prudential policies, which regulate access to financing, are an effective policy tool to control house price growth.

Keywords: macro-prudential policy, loan-to-value limits, LTV, house price growth

JEL Classification: E44, E58, G21, G28

Suggested Citation

Nielsen, Kasper Meisner, Loan-to-Value Limits and House Prices (September 2019). Available at SSRN: or

Kasper Meisner Nielsen (Contact Author)

Copenhagen Business School - Department of Finance ( email )

A4.17 Solbjerg Plads 3
Copenhagen, Frederiksberg 2000

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