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We show that the equilibrium loan-to-value (LTV) distribution in
the US mortgage market has been remarkably stable over the last
quarter century, both in aggregate and region-by-region, despite
large, cross-sectionally heterogeneous house price cycles. While
high-LTV mortgages changed from being explicitly government
backed to privately securitized and back, their overall fraction re-
mained unchanged. A repeat-sales methodology and an analysis of
loan performance confirm that this stability in the distribution of
LTVs holds even within subgroups of the population. These findings are inconsistent with models of credit cycles that use changes
in collateral constraints to generate boom-bust dynamics in house
prices.
