Credit supply affecting housing demand The links between these two markets run in both directions, from housing credit to the housing market, and from the housing market to housing credit. Of late, the story more commonly told, though, is that a tightening in the supply of credit over recent years has impinged on the demand for housing.
Most mortgages for homes, and vehicle loans, are taken out by that 20% of households earning the most income that we talked about earlier. Lower down the income ladder, the composition of debt changes. Mortgages and vehicle loans more or less disappear. In their place, we see more high-cost debt, like store cards or informal loans.