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The role of housing and mortgage markets in the financial crisis

Publication ,  Journal Article
Adelino, M; Schoar, A; Severino, F
Published in: Annual Review of Financial Economics
November 1, 2018

Ten years after the financial crisis of 2008, there is widespread agreement that the boom in mortgage lending and its subsequent reversal were at the core of the Great Recession. We survey the existing evidence, which suggests that inflated house-price expectations across the economy played a central role in driving both the demand for and the supply of mortgage credit before the crisis. The great misnomer of the 2008 crisis is that it was not a subprime crisis but rather a middle-class crisis. Inflated house-price expectations led households across all income groups, especially the middle class, to increase their demand for housing and mortgage leverage. Similarly, banks lent against increasing collateral values and underestimated the risk of defaults. We highlight how these emerging facts have essential implications for policy.

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Published In

Annual Review of Financial Economics

DOI

EISSN

1941-1375

ISSN

1941-1367

Publication Date

November 1, 2018

Volume

10

Start / End Page

25 / 41

Related Subject Headings

  • 3502 Banking, finance and investment
 

Citation

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Adelino, M., Schoar, A., & Severino, F. (2018). The role of housing and mortgage markets in the financial crisis. Annual Review of Financial Economics, 10, 25–41. https://doi.org/10.1146/annurev-financial-110217-023036
Adelino, M., A. Schoar, and F. Severino. “The role of housing and mortgage markets in the financial crisis.” Annual Review of Financial Economics 10 (November 1, 2018): 25–41. https://doi.org/10.1146/annurev-financial-110217-023036.
Adelino M, Schoar A, Severino F. The role of housing and mortgage markets in the financial crisis. Annual Review of Financial Economics. 2018 Nov 1;10:25–41.
Adelino, M., et al. “The role of housing and mortgage markets in the financial crisis.” Annual Review of Financial Economics, vol. 10, Nov. 2018, pp. 25–41. Scopus, doi:10.1146/annurev-financial-110217-023036.
Adelino M, Schoar A, Severino F. The role of housing and mortgage markets in the financial crisis. Annual Review of Financial Economics. 2018 Nov 1;10:25–41.

Published In

Annual Review of Financial Economics

DOI

EISSN

1941-1375

ISSN

1941-1367

Publication Date

November 1, 2018

Volume

10

Start / End Page

25 / 41

Related Subject Headings

  • 3502 Banking, finance and investment