Impacts of loan-to-value ceilings in the Brazilian mortgage loans

Abstract

This study aims to assess the impact of loan-to-value ceiling applied by Resolution BCB No. 4,271 on the mortgage market in September 2013. Based on public aggregated data, we assessed the effect of the regulatory change on the loan-to-value and on quality of the portfolio using impact evaluation techniques that aim to estimate true causal effects. Results suggest the intervention did not reduce total mortgage loans. Interrupted time series and differences-in-differences estimates show statistically significant effects on the quality of the portfolio measured by the proportion of poorly rated credits.

Keywords

• differences-in-differences
• interrupted time series
• synthetic control
• loan-to-value ratio on the loan amount
• real estate loans