Conclusion

Mortgage constraints are usually introduced to restrain credit and household leverage, but their effects extend beyond the amount borrowed. Exposure depends on the policy instrument, household resources, and lender implementation. Households respond through debt, liquid savings, housing choices, and the timing of homeownership. The direct credit response is modest and comes in large part from fewer mortgage originations.

Aggregate estimates are larger than the household-level results can explain mechanically. Housing markets, lenders, and expectations provide plausible amplification channels, and amplification within the range found in related credit settings can account for much of the difference. These market responses also spread the incidence to existing owners, renters, lenders, and households that receive reallocated credit. The corrective benefit depends on whether the resulting changes prevent the build-up of vulnerable balance sheets. Historical crisis risk is highest during joint credit and house-price booms, while most tightenings occur outside that state.

A decline in credit therefore shows that the policy reduced leverage, but not whether it improved welfare. That assessment also requires the value of the borrowing capacity households lose, the incidence of equilibrium changes, and the path financial vulnerability would have followed without the policy. The evidence reviewed here identifies many of these components and some areas for future research where the gain from more knowledge is especially high.