RT Journal Article
T1 The mortgage rate channel of monetary policy transmission: a tale of two countries
A1 Luengo Prado, María José
A1 Cooper, Daniel
A1 Garga, Vaishali
AB We study the mortgage rate channel of monetary policy transmission under two different mortgage regimes by analyzing the United States with primarily long-term fixed-rate mortgages (FRMs) and Spain with mainly annually resetting adjustable-rate mortgages (ARMs). We find a robust transmission of mortgage rate changes to spending in both regimes, with marginal propensities to consume ranging between 0.58–0.67 in Spain and 0.27–0.52 in the United States. Under ARMs, transmission is stronger when rate changes are expected to persist, whereas under FRMs, the effect is larger when rate changes are expected to revert. We further document the important role of mortgage type in shaping the variation in transmission across mortgagors—while the mortgage rate effect is fairly homogeneous across diverse household characteristics under ARMs, it is more heterogeneous under FRMs and largest among potential refinancers.
PB Cambridge University Press
SN 1365-1005
YR 2025
FD 2025
LK https://hdl.handle.net/20.500.14352/133818
UL https://hdl.handle.net/20.500.14352/133818
LA eng
NO Cooper, D., Garga, V., & Luengo-Prado, M. J. (2025). The mortgage rate channel of monetary policy transmission: A tale of two countries. Macroeconomic Dynamics, 29, e163. https://doi.org/10.1017/S1365100525100667
NO 2025 Acuerdos transformativos CRUE
DS Docta Complutense
RD 14 mar 2026