Heterogeneous impacts of macroprudential policies: Financial advisors, regulatory caps, and mortgage risk

This paper examines the impact of borrower-based macroprudential policy tightening on mortgage lending in Slovakia, focusing in particular on the role of loan mediation via financial advisors in shaping loan characteristics. Using a comprehensive loan-level dataset from Slovak banks, we analyze the effects of key regulatory tools, Loan-to-Value (LTV) and Debt-to-Income (DTI) limits, on mortgage risk profiles. Our contributions include: (i) showing that restrictive borrower-based measures (BBMs) reduce the riskiest loans but push lower-risk segments towards regulatory thresholds, thus reshaping the risk profile of the mortgage loan portfolio; (ii) demonstrating that loans mediated through financial advisors tend to have higher amounts, LTVs, DTIs, and longer maturities; and (iii) identifying significant front-loading behavior following policy tightening announcement, particularly for loans mediated through advisors. These findings highlight the importance of detailed micro-level data in capturing policy effects and informing more effective macroprudential regulation.