SNSF Project: Mortgage Borrowing Constraints Beyond the Housing Market
Interview with co-applicant Gazi Kabas (Tilburg University) and project partner Emilia Garcia-Appendini (University of St. Gallen)
Steven Ongena, Gazi Kabas, Emilia Garcia-Appendini and Kasper Roszbach have received a grant from the Swiss National Science Foundation (SNSF) for their joint project, “Mortgage Borrowing Constraints Beyond the Housing Market.” This research explores the impact of mortgage borrowing limits not only on the housing market but also on the broader economy.
The project brings together two former members of the University of Zurich Department of Finance, Emilia Garcia-Appendini and Gazi Kabas, who are collaborating with Steven Ongena.
Emilia Garcia-Appendini is is Associate Professor of Banking at the University of St. Gallen. She previously served as a Senior Research Fellow at our department and has co-authored research with Steven Ongena.
Gazi Kabas is Assistant Professor of Finance at Tilburg University, specializing in sustainable finance, household finance, and banking. He is a proud PhD alumnus of our department. During his PhD, he was advised by Steven Ongena, with whom he co-authored two research papers.
Dear Emilia and Gazi, can you tell us more about your project: “Mortgage Borrowing Constraints Beyond the Housing Market”?
In this project, we will analyze how households adjust their non-housing market behavior when a mortgage borrowing restriction is introduced in the economy. In particular, we want to understand to what extent households adjust their consumption, financial assets, and housing decisions when they face a borrowing restriction. We will use data from Norway to analyze these behaviors.
What motivated you to apply for this specific grant?
One important lesson we learned after the Global Financial Crisis in 2008 is that high household debt can have large negative effects on financial stability and the economy.
To prevent such negative effects, many countries, including Switzerland, have introduced borrowing restrictions for households. To understand these restrictions, we can consider the most popular one: the loan-to-value ratio restriction. Suppose that this restriction is set at 80 percent, as it is used in Switzerland. This means that a household can get a mortgage up to 80 percent of the home value and has to use their savings to cover the remaining 20 percent of the home value. On the one hand, this restriction reduces household debt levels. On the other hand, it makes home purchases more difficult.
As you see, this trade-off and other possible unintended effects make it difficult to understand whether such restrictions improve the welfare of society. Therefore, we believe that more research needs to be done to understand the consequences of these restrictions.
What does this grant mean for your work or future research?
To conduct this project, we need to collect several laborious data sets that enable us to observe household behavior beyond the housing market. Without this generous research grant, this project would be too difficult to complete rigorously. In addition, this project is an initial part of a research agenda in which we plan to investigate the determinants of financial stability. Thanks to this grant, we hope to contribute to the discussions about the financial stability in the future.
Thank you very much for taking the time and sharing your thoughts with us!
More information:
About SNSF Grant: https://www.df.uzh.ch/en/news-events/awards-grants/2025/steven-ongena-receives-snsf-grant.html
Emilia Garcia-Appendini is an Associate Professor of Banking at the University of St. Gallen (HSG). She was a Senior Research Fellow at our Department of Finance before joining HSG.
https://sites.google.com/site/mariemigarcia/
Gazi Kabas is an Assistant Professor of Finance at Tilburg University and a proud PhD alumnus of our Department of Finance. https://gkabas.netlify.app/
Photo source: Microsoft