View: Percent of total bank lending 1928-2007
Percent of total bank lending 1928-2007
U.S. mortgage loans in banks’ total lending portfolios have doubled from about 30% in 1900 to about 60% today.
The core business model of banks in advanced economies today resembles that of real estate funds.
Mortgage lending to households and has little to do with the financing of the business sector.
Record-high leverage ratios potentially increase the fragility of household balance sheets and the financial system itself.
Since WW2 real estate credit has become a significant predictor of impeding financial fragility.
The aftermaths of mortgage booms are marked by deeper recessions and slower recoveries.
The slump is deeper and the recovery slower if mortgage growth was rapid in the preceding boom.
Mortgaging has been a major influence on financial fragility in advanced economies, and has also increasingly left its mark on business cycle dynamics.
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