Research Department Working Papers
Credit and Housing Price Effects of Automated Underwriting Adoption
No. 2506 (Revised May 2026, new title)
Abstract: We study how the 1990s adoption of now widely-used automated mortgage underwriting systems affected credit, house prices and their comovement across locations. The effects go well beyond processing improvements. By implementing more complex, statistically-informed lending rules, the systems allowed households to borrow more, pushing up house prices. Furthermore, by transmitting a common set of credit standards across lenders, the new technology increased house price synchronization. Together, our results illustrate how new lending technology can generate systematic credit supply shocks, influencing house prices and increasing market interconnectedness.
DOI: https://doi.org/10.24149/wp2506r2