Staff Working Paper No. 1,147
By Belinda Tracey and Neeltje van Horen
We examine how easing mortgage borrowing constraints affects entry into homeownership. Using administrative mortgage data and cross‑district exposure to the UK Help‑to‑Buy program, which reopened the 95% loan-to-value segment in 2013, we show that first‑time buyer purchases rose sharply in more exposed areas. Introducing a new proxy for financial support – based on the gap between observed and predicted down payments – we find that gains were concentrated among households unlikely to have relied on transfers, suggesting a weaker role for family wealth in enabling homeownership. Because these buyers tend to have higher incomes, the composition of homeowners shifted toward higher‑income households.
Credit constraints and the redistribution of housing wealth