Monetary Conditions and Community Redistribution through Mortgage Markets

68 Pages Posted: 20 Apr 2024

See all articles by Manish Gupta

Manish Gupta

Nottingham University Business School

Steven Ongena

University of Zurich - Department Finance; Swiss Finance Institute; KU Leuven; NTNU Business School; Centre for Economic Policy Research (CEPR)

Date Written: April 10, 2024

Abstract

We examine the redistributive impact of 30-year mortgage and federal funds rates on mortgage lending between 1995 and 2021. Between 2008 and 2014, the Fed deployed Quantitative Easing (QE) by purchasing mortgage-backed securities, intendedly lowering mortgage rates. We find that lending is regressive pre-QE, becomes progressive during the QE era, and then reverts to being regressive following the QE's conclusion until 2019. Nonbank lending becomes regressive when the federal funds rate increases between 2015 and 2019, and this pattern persists during the pandemic. In contrast, while banks lend regressively until 2019, they refinance progressively during the pandemic.

Keywords: Inequality, Mortgage, Financial Crisis, Quantitative Easing (QE), COVID-19, Nonbanks

JEL Classification: E52, G01, G21, G23, G51, H23, R23

Suggested Citation

Gupta, Manish and Ongena, Steven R. G., Monetary Conditions and Community Redistribution through Mortgage Markets (April 10, 2024). Swiss Finance Institute Research Paper No. 24-28, Available at SSRN: https://ssrn.com/abstract=4800533 or http://dx.doi.org/10.2139/ssrn.4800533

Manish Gupta

Nottingham University Business School ( email )

University of Nottingham
Jubilee Campus
Nottingham, NG8 1BB
United Kingdom

Steven R. G. Ongena (Contact Author)

University of Zurich - Department Finance ( email )

Schönberggasse 1
Zürich, 8001
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

NTNU Business School ( email )

Norway

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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