Abstract
We ask how financial deregulation in Sweden during the 1980s affected housing finance by studying data on loan‐to‐value (LTV) ratios for home owners who moved recently. Accounting for the impact of demographic and economic determinants we find that LTV ratios were higher between 1985 and 1987 than in earlier and later years. This time pattern suggests that the deregulation of the mortgage institutions and the removal of the loan rate ceiling on banks in 1983 and 1984 were more important than abolishment of the bank loan ceiling in late 1985. They also indicate a decrease in loan demand and/or supply as early as 1988, i.e., well before the banking crisis.
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