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The effect of interest rates on the demand for mortgage credit in South Africa
This paper uses novel and detailed mortgage origination data to estimate the interest rate elasticity of mortgage demand along the intensive margin in South Africa. I find that homebuyers increase the size of the mortgage they take out by 2.8 percent in response to a 1 percentage point decrease in t...
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| Other Authors: | |
| Format: | Thesis |
| Language: | English English |
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School of Economics
2025
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| _version_ | 1867613408273104896 |
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| access_status_str | Open Access |
| author | Earl, Gemma |
| author2 | Davids, Allan |
| author_browse | Davids, Allan Earl, Gemma |
| author_facet | Davids, Allan Earl, Gemma |
| author_sort | Earl, Gemma |
| collection | Thesis |
| description | This paper uses novel and detailed mortgage origination data to estimate the interest rate elasticity of mortgage demand along the intensive margin in South Africa. I find that homebuyers increase the size of the mortgage they take out by 2.8 percent in response to a 1 percentage point decrease in the prime interest rate. Additionally, I explore the effect on housing demand since homebuyers may adjust their housing preferences when interest rates change. I find that homebuyers purchase 2.3 percent more expensive properties. The resultant impact on the degree of mortgage leverage is economically small. These findings have implications for monetary policy transmission in the housing market and financial stability more generally. |
| format | Thesis |
| id | oai:open.uct.ac.za:11427/42216 |
| institution | University of Cape Town (South Africa) |
| language | English eng |
| last_indexed | 2026-06-10T12:35:40.446Z |
| license_str | Not specified — see source repository |
| provenance_str_mv | Harvested via OAI-PMH from UCTD — University of Cape Town Open Access Repository |
| publishDate | 2025 |
| publishDateRange | 2025 |
| publishDateSort | 2025 |
| publisher | School of Economics |
| publisherStr | School of Economics |
| record_format | dspace |
| source_str | UCTD — University of Cape Town Open Access Repository |
| spelling | oai:open.uct.ac.za:11427/42216 The effect of interest rates on the demand for mortgage credit in South Africa Earl, Gemma Davids, Allan South Africa Mortgage Credit This paper uses novel and detailed mortgage origination data to estimate the interest rate elasticity of mortgage demand along the intensive margin in South Africa. I find that homebuyers increase the size of the mortgage they take out by 2.8 percent in response to a 1 percentage point decrease in the prime interest rate. Additionally, I explore the effect on housing demand since homebuyers may adjust their housing preferences when interest rates change. I find that homebuyers purchase 2.3 percent more expensive properties. The resultant impact on the degree of mortgage leverage is economically small. These findings have implications for monetary policy transmission in the housing market and financial stability more generally. 2025-11-13T11:40:10Z 2025-11-13T11:40:10Z 2025 2025-11-13T11:37:42Z Thesis / Dissertation Masters MCom http://hdl.handle.net/11427/42216 en eng application/pdf School of Economics Faculty of Commerce University of Cape Town |
| spellingShingle | South Africa Mortgage Credit Earl, Gemma The effect of interest rates on the demand for mortgage credit in South Africa |
| thesis_degree_str | Master's |
| title | The effect of interest rates on the demand for mortgage credit in South Africa |
| title_full | The effect of interest rates on the demand for mortgage credit in South Africa |
| title_fullStr | The effect of interest rates on the demand for mortgage credit in South Africa |
| title_full_unstemmed | The effect of interest rates on the demand for mortgage credit in South Africa |
| title_short | The effect of interest rates on the demand for mortgage credit in South Africa |
| title_sort | effect of interest rates on the demand for mortgage credit in south africa |
| topic | South Africa Mortgage Credit |
| url | http://hdl.handle.net/11427/42216 |
| work_keys_str_mv | AT earlgemma theeffectofinterestratesonthedemandformortgagecreditinsouthafrica AT earlgemma effectofinterestratesonthedemandformortgagecreditinsouthafrica |