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Prime borrowers are more likely to own investment homes during recessions than during recoveries, while subprime borrowers are less likely to do so. This contrasting pattern conforms with the observation that the homeownership rates of these two types of borrowers have followed opposite trends since the mid-1990s. We attribute such divergence in homeownership to the better credit access of the prime borrowers and show that this asymmetry is amplified when subprime borrowers are previously subjected to lax credit conditions and have high debt-to-value ratios. An expansionary monetary policy can bridge this gap in housing wealth.

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