Housing loan market vibrates according to the policies, such as

  • LTV rate, for example, if must pay 20% downpayment, LTV rate would be 80%
  • interest rate, for example, lifting the loan rate, the market shall shrink
  • loan tenor, for example, if a new policy limits Housing loan to 10 years, the market will change drastically
  • I assume GDP growth rate, house pricing rate, and inflation rate also play a role here.

How to set up a model to estimate the housing loan market?

To be more complex, if policies set differenet set of limits on LTV rate, loan rate, loan tenor, for a family's first, 2nd, and 3rd real estate, is it possible to also cover the structure change?

It's a big topic, I hope someone with the experience could suggest where could I start, for example some proven industry model, or some book that summarized the relative models.


1 Answer 1


This is an incredibly broad question, there are tons of different schools of thought, and each housing market reacts differently to various different unions of fundamentals. Also, the type of housing market makes a huge difference, single detached housing vs. multi story apartment complexes,...Every investment bank's research dept. applies different set of tools and this is just a subset of all those who attempt to model housing. But here maybe couple starting points to ponder about:

A broad and very basic introduction by the Fed S.F.

And a collection of papers that look at different fundamentals and apply different models:

You should be able to find a lot more if you dig a little deeper. But from how you worded the question I got the impression you are better off looking at the bare basics first, in that case I recommend a read through the Fed paper as starting point.

  • $\begingroup$ yeah i'm recently asked by my boss, that with the policy changing in Singapore (limiting LTV & increase tax), and possible changes in the future (tenor or rate), what kind of change would bring to our banking book.... I fancy there're too many things available so to avoid get overwhemed I'm seeking advices from experts for some good starting points. Thanks, let me digest the Fed thing first... $\endgroup$
    – athos
    Mar 6, 2013 at 8:21
  • $\begingroup$ Ok, here a recommendation that has served me very well with "funny bosses" in the past (and which I urged my subordinates to inquire from me as well at all times): Always, always ask for a clear scope, intention, and level of detail required before you agree to do any job. In that way it is well defined what is asked of you and whether your later delivered work is meeting the target or not. Don't ever let your boss get off the hook with "please model the housing market" comments by him/her. $\endgroup$
    – Matt Wolf
    Mar 6, 2013 at 8:36
  • $\begingroup$ So, I highly recommend you to get back to your boss and ask whether his inquiry only focuses on the Singapore housing market, over what time horizon, what type of housing, agree with him which data to include in your work. Not only will it potentially safe your ...., but I as boss appreciate those who know how to manage a project of such scope and the first step is defining scope. $\endgroup$
    – Matt Wolf
    Mar 6, 2013 at 8:40
  • $\begingroup$ thanks a lot for the suggestion! I'm a bit new in the industry, your ideas are much appreciated :) $\endgroup$
    – athos
    Mar 7, 2013 at 1:13

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