On the whole the impact of higher interest rates on economic growth has been more muted than most expected but some countries have “felt the pinch” more than others.
Countries where fixed-rate mortgages are more common or where homebuyers are less in debt are typically more insulated from higher borrowing costs hence some countries have performed better than others in recent months.This was the gist of a piece of research, Feeling the Pinch? Tracing the Effects of Monetary Policy through Housing Markets included in the latest economic outlook from the International Monetary Fund , which was published ahead of the full report due out later today.
“Our results indicate that monetary policy has greater effects on activity in countries where the share of fixed-rate mortgages is low. This is due to homeowners seeing their monthly payments rise with monetary policy rates if their mortgage rates adjust,” noted an IMF blog explaining the research.
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