These heterogeneous effects are mainly attributable to the introduction of differentiated LTV limits by category of borrowers.9 While several papers investigating the effects of LTV or DSTI caps use a multi-country framework, and policy dummies or macroprudential indices to operationalise the definition of macroprudential policy,10 single-country studies provide a more focused analysis on the impact of these measures.
For instance, both one paper on Israel11 and one on Sweden12 found that the introduction of an LTV limit did not reduce the number of borrowers accessing credit; but it did encourage borrowers to borrow less and to buy cheaper and lower-quality houses. There is also some evidence of unintended consequences, such as spillovers (banks shifting risk to other business areas), and circumvention.