. While stricter LTV limits are often considered as a measure to tackle the rise in household indebtedness, I find that policy … loan-to-value (LTV) ratio. Motivated by the Swedish micro-data, I explore an alternative arrangement where borrowers are … constrained by the feasibility of repayment, but choose a house of maximum permissible size conditional on the LTV restriction …

house price growth on dampening the excess volatility of household debt in the standard DSGE model. The study also discusses … the effect of introducing the debt-to-income ratio, aside from the loan-to-value ratio, on cooling down large household … its reaction to house price growth in moderating household debt swings to exogenous shocks …