Interest Rate Transmission to Housing Markets
Traces the nonlinear transmission of central bank rate changes through mortgage markets, housing prices, and wealth effects.
Key findings
- Rate increases above 200bps create a lock-in effect that freezes housing turnover for 18-24 months.
- Wealth effects from housing price declines reduce consumer spending by 0.3-0.5% per 10% home price decline.
- Variable-rate mortgage concentrations above 30% amplify transmission speed by 2.5x.