Sein is always interested in new research that helps shed light on the complex dynamics of the housing market. A recently updated research note by Andreas Fuster and Basit Zafar of the Federal Reserve Bank of New York (FRBNY) provides important insights in understanding the impact of monetary policy on the dynamics of housing demand in relation to mortgage rates and down payment requirements. Specifically, using the change in willingness to pay (WTP), Fuster and Zafar conclude:
- A decrease in down payment requirements or an increase in non-household wealth has large affects on WTP;
- A decrease of 2-percentage points in rates changes WTP on average by 5%.