We analyze the impact of easing borrower-based measures on residential mortgage credit and borrower characteristics in the Czech Republic in early-2020. This easing included relaxing the LTV limit and abolishing DTI and DSTI limits. Our findings indicate that affected households increased borrowing, bought more expensive houses, and decreased collateral value. Borrowers' debt service rose but was offset by income growth. We find: (i) LTV-constrained borrowers showed cash-retention behavior, while DTI and DSTI constrained borrowers aligned with the financial accelerator motive; (ii) LTV relaxation had a greater effect in poorer counties, while DTI and DSTI abolishment affected richer regions; (iii) younger borrowers were more impacted by LTV and DTI easing, whereas DSTI easing influenced older borrowers; (iv) LTV relaxation mainly affected first-time borrowers, while DTI and DSTI abolishment impacted second-time borrowers who obtained higher mortgages and bought pricier properties.Recommended citation: Hodula, M., Pfeifer, L., & Ngo, N. A. (2023). Easing of Borrower-Based Measures: Evidence from Czech Loan-Level Data. CNB Working Paper, 18/2023, Czech National Bank.
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