Changing relationships manifest in how homes are financed.
This paper documents stylized and empirical facts associated with co-borrowers in the US mortgage market since the early 1990s. The share of mortgages with a co-borrower has declined dramatically across different income and demographic groups.
We show that this decline, despite being a universal phenomenon across the US, evinces significant regional heterogeneity which contributes to the divergence in local mortgage markets outcomes. Regions with a lower co-borrower share have higher mortgage default rates.
Further, in an event of an adverse shock, regions with a low share of mortgages with a co-borrower experience persistently lower house price growth, and lower purchase and refinance mortgage growth.
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