IEAS Working Paper No. 26-A002, July 2026

Abstract:
This paper studies how expanding mortgage credit affects housing purchases, exploiting
Taiwan’s 2023 reform of the Youth Preferential Housing Loan program, which
raised the maximum loan limit by 25%. Using matched administrative data and a
difference-in-differences design, we find treated borrowers increased loan amounts by
13.4% and purchase prices by 17.9%, implying a demand elasticity of 1.34. The reform
also shifted purchases toward premium urban locations and disproportionately
benefited credit-constrained borrowers—women, non-college-educated individuals, and
younger buyers—enabling them to obtain larger loans and purchase more expensive
homes.