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Working Papers

The Impacts of Affordable Lending Efforts on Home Ownership Rates

Working paper #304
Roberto G. Quercia, George W. McCarthy and Susan M. Wachter

• The authors develop and test a methodology to assess the impact of affordable lending efforts on homeownership rates. In this demand analysis, they examine the impact of using flexible underwriting guidelines, primarily changes in the down payment and debt burden requirements, on the affordability and homeownership propensities of targeting populations and geographic areas. The impacts of changing these underwriting guidelines are compared with those resulting from lower borrowing costs (interest rates).
• The findings indicate that affordable lending efforts are likely to increase homeownership opportunities for undeserved populations, but that impacts may not be felt equally by all groups. Under most affordable products, the impacts on all households, recent movers and central city households are smaller than for other households. Unfortunately, the analysis also suggests that unless the supply of appropriately priced housing is increased the full benefits of affordable lending efforts may not be realized.

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