Application of Simulation Modeling to Assess the Impact of Preferential Mortgage Programs on Housing Affordability

This article presents the results of a comprehensive study of the residential real estate market, taking into account the impact of various preferential mortgage lending programs, using simulation modeling. The article explores the high heterogeneity of agents, information asymmetries, and nonlinear interactions between housing market participants, which limit the applicability of classical econometric methods. The proposed agent-based model describes the interactions of housing market agents with different consumer characteristics and assesses the government's influence on the mortgage lending market. The simulation was based on three scenarios describing various market conditions, such as a 20% mortgage rate, a preferential rate, and a preferential rate for a specific population category (using the population under 25 as an example). Particular attention is given to a comparative evaluation of the results of computational experiments based on a study of real estate price dynamics, sales volumes, housing affordability indexes, and the mortgage affordability index. The results obtained in the article demonstrate that targeted preferential lending programs are the most effective in terms of mortgage lending affordability while mitigating the impact on supply and demand imbalances in the market. It is also evident that changes in government policy only affect key indicators of the residential real estate market in the short term. The obtained results reveal the potential of using agency-based modeling as a tool for assessing and predicting the implementation of changes to government support measures in mortgage lending, thereby facilitating informed strategic decision-making in housing policy.