The effect of interest rates on the demand for mortgage credit in South Africa

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dc.contributor.advisorDavids, Allan
dc.contributor.authorEarl, Gemma
dc.date.accessioned2025-11-13T11:40:10Z
dc.date.available2025-11-13T11:40:10Z
dc.date.issued2025
dc.date.updated2025-11-13T11:37:42Z
dc.description.abstractThis 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.
dc.identifier.apacitationEarl, G. (2025). <i>The effect of interest rates on the demand for mortgage credit in South Africa</i>. (). University of Cape Town ,Faculty of Commerce ,School of Economics. Retrieved from http://hdl.handle.net/11427/42216en_ZA
dc.identifier.chicagocitationEarl, Gemma. <i>"The effect of interest rates on the demand for mortgage credit in South Africa."</i> ., University of Cape Town ,Faculty of Commerce ,School of Economics, 2025. http://hdl.handle.net/11427/42216en_ZA
dc.identifier.citationEarl, G. 2025. The effect of interest rates on the demand for mortgage credit in South Africa. . University of Cape Town ,Faculty of Commerce ,School of Economics. http://hdl.handle.net/11427/42216en_ZA
dc.identifier.ris TY - Thesis / Dissertation AU - Earl, Gemma AB - 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. DA - 2025 DB - OpenUCT DP - University of Cape Town KW - South Africa KW - Mortgage Credit LK - https://open.uct.ac.za PB - University of Cape Town PY - 2025 T1 - The effect of interest rates on the demand for mortgage credit in South Africa TI - The effect of interest rates on the demand for mortgage credit in South Africa UR - http://hdl.handle.net/11427/42216 ER - en_ZA
dc.identifier.urihttp://hdl.handle.net/11427/42216
dc.identifier.vancouvercitationEarl G. The effect of interest rates on the demand for mortgage credit in South Africa. []. University of Cape Town ,Faculty of Commerce ,School of Economics, 2025 [cited yyyy month dd]. Available from: http://hdl.handle.net/11427/42216en_ZA
dc.language.isoen
dc.language.rfc3066eng
dc.publisher.departmentSchool of Economics
dc.publisher.facultyFaculty of Commerce
dc.publisher.institutionUniversity of Cape Town
dc.subjectSouth Africa
dc.subjectMortgage Credit
dc.titleThe effect of interest rates on the demand for mortgage credit in South Africa
dc.typeThesis / Dissertation
dc.type.qualificationlevelMasters
dc.type.qualificationlevelMCom
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