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Research Monograph Impact of Easing Housing Finance Regulations on Borrowing Behavior October 31, 2019

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Series No. 2019-09

Research Monograph KOR Impact of Easing Housing Finance Regulations on Borrowing Behavior #Financial Supervisory and Policy #Consumer Finance #Banks and Financial Institutions
DOIhttps://doi.org/10.22740/kdi.rm.2019.09 P-ISBN979-11-5932-534-2 E-ISBN979-11-5932-579-3

October 31, 2019

  • KDI
    Kim, Young Il
  • 프로필
    OH, Yoonhae
  • KDI
  • 프로필
    KIM, Meeroo
Summary
As the primary drivers of Korea’s swelling household debt and continued signs of an overheating in the housing market, many have pointed to the government’s use of the LTV and DTI ratios to ease housing finance regulations in August 2014, especially within the capital region. Indeed, although there was much interest in and debates over the impact of the easing at the time, there was little understanding of the actual effects. Accordingly, this study examines the impact of the easing of housing finance regulations on households’ decision-making, particularly in terms of borrowing behavior, home purchases and credit risk. To that end, this study uses household survey data and individual-level Credit Bureau (CB) data, and applies the difference -in-difference identification method which uses households in the capital region―who were subject to more expansive regulatory easing―as the experimental group. Subsequently, the impact of the eased regulations on the borrowing behavior of both households and individuals, demand for home purchases and debtors’ debt structure and credit risk was then analyzed.

Drawing on the Survey of Household Finances and Living Conditions, Chapter 2 examines how the regulatory easing affected households’ borrowing behavior and home purchasing decisions. In particular, the changes in borrowing behavior were connected to the changes in the number of homes owned in order to discern not only the impact on borrowing behavior but also the direct and indirect impact on the demand for home purchases. According to the results, the effects of regulatory easing were mainly centered around households with pre-existing mortgages. And in terms of the effect on housing demand, there was a considerable indirect effect of increased additional home purchases without loans as well as the direct effect of increased home purchases via mortgages. An additional analysis was also conducted on the differing impact of the eased regulations according to household characteristics such as age, net asset, income, multi-home ownership and LTV level.

Chapter 3 explores the effects of the LTV and DTI ratio-based regulatory easing on the demand for mortgages at the individual level using the CB’s credit data on individuals. Above all, efforts were made to understand the changes in borrowing behaviour as a result of regulatory easing in relation to the demand for home purchases and housing market conditions by including information on borrowers’ residence and on the housing market conditions of the region, even at the administrative division-level (dong). The results show that the probability of taking on another mortgage was more pronounced among those with pre-existing mortgages for both the purposes of buying homes and being used for living expenses. In addition, the impact of the regulatory easing varied depending on the regional housing market conditions of borrowers as well as on individual characteristics such as income; whether the individual was self-employed and; credit ratings.

Chapter 4 analyzes the relation between the eased regulations in the capital region (August 2014) and borrowers’ credit risk, and examines which credit group was more affected by the changes in credit risk. It was found that borrowers in the capital region were less likely to make late payments than their non-capital region counterparts, and that the impact was more obvious among low-income/low-credit debtors. This is because the regulatory easing was more focused on low-rate mortgages which could help lower the credit risk of borrowers who could afford to take on another mortgage. The analysis confirms that the reduction in credit risk resulting from regulatory easing was driven by the changes in borrowers’ debt structure which comes with the decrease in the proportion of high-cost loans and repayment burden.

Overall, this study examines the impact of the eased regulations on households’ borrowing, demand for home purchases and credit risk using micro-data analysis. It also provides significant implications for not only the comprehensive understanding of the impact of the easing but also for the effects of different household and individual characteristics, relevance to the housing market and specific implementation methods. By comprehensively taking into account the heterogeneous characteristics of borrowers and housing market conditions, this study attempts to contribute to the understanding of the ripple effects of regulatory policies and to enhancing the effectiveness of future policy designs.
Contents
발간사
요 약

제1장 서 론
 참고문헌

제2장 주택금융규제 완화가 가계의 주택담보대출과 주택 보유에 미친 영가구자료를 중심으로 (김영일오윤해)
 제1절 서 론
 제2절 연구의 배경과 선행연구
 제3절 분석 방법과 자료
 제4절 회귀분석 Ⅰ- 규제완화가 주담대 잔액 및 보유주택 수에 미친 영향 (연속형 종속변수)
 제5절 회귀분석 Ⅱ- 규제완화가 주담대 증가 및 주택 증가 확률에 미친 영 (이산형 종속변수)
 제6절 결 론
 참고문헌
 부 록

제3장 주택금융규제 완화가 주택담보대출 신규계좌 수요에 미치는 영향: CB 자료를 중심으로 (오윤해김영일김미루임상빈)
 제1절 서 론
 제2절 선행연구와 본 연구의 특징
 제3절 주택금융규제 정책의 배경과 연구가설 설정
 제4절 분석 방법과 자료의 성격
 제5절 실증분석 결과와 해석
 제6절 결 론
 참고문헌
 부 록

제4장 주택금융규제의 완화가 주택담보대출 보유 차주의 신용위험 및 채구조에 미치는 영향 (김미루오윤해)
 제1절 서 론
 제2절 본 연구의 주요 쟁점과 선행연구
 제3절 연구방법 및 자료의 성격
 제4절 실증분석 결과
 제5절 결 론
 참고문헌
 부 록

ABSTRACT
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