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.