Tighter loan-to-value ratios have stronger impact than a reduction

Photo of mortgage lending

A higher limit on loan-to-value (LTV) ratios has a larger macroeconomic effect than a lower limit, according to research published by the Netherlands Bank (DNB).

In Heterogeneity and asymmetric macroeconomic effects of changes in loan-to-value limits, Jasper de Jong and Emmanuel de Veirman analyse the wider effects these macro-prudential measures had on the Dutch economy between 2011 and 2018.

“We find that changes in the LTV cap have non-linear effects in the sense that the effects become

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