Final answer:
Increasing demand due to demographic changes and economic confidence leads to increased equilibrium price and quantity in the market for home loans. A large number of loan defaults by banks leads to a decrease in supply and a decrease in equilibrium price and quantity in the market for home loans.
Step-by-step explanation:
When the number of people at the most common ages for home-buying increases, it will lead to an increase in the demand for housing. This will shift the demand curve to the right. As a result, the equilibrium price and quantity in the market for home loans will increase. The increase in demand will drive up the price of housing and also lead to an increase in the quantity of home loans.
When people gain confidence that the economy is growing and that their jobs are secure, it will lead to an increase in the demand for housing. This will shift the demand curve to the right. As a result, the equilibrium price and quantity in the market for home loans will increase. The increase in demand will drive up the price of housing and also lead to an increase in the quantity of home loans.
When banks that have made home loans find that a larger number of people than they expected are not repaying those loans, it will lead to a decrease in the supply of housing. This will shift the supply curve to the left. As a result, the equilibrium price and quantity in the market for home loans will decrease. The decrease in supply will drive down the price of housing and also lead to a decrease in the quantity of home loans.